Thursday, July 25, 2024

Freelancer vs. small business owner vs. entrepreneur – what is the difference and how to make a transition

If you’ve decided to turn your hobby or a skill you are good at into a business, there are several things you need to make sure you have on your checklist beforehand. If you are planning to operate your own business in the future, then you might consider checking out  Money Brighter to learn how to start an llc in texas in 6 simpler steps.

In today’s gig economy, more and more professionals are deciding to become self-employed or work in some sort of freelance capacity.

As job security is on the decline, there has been a shift  from traditional permanent employment towards work-from-home roles, contracted positions and project-based work.

In reality, there are different kinds of being your own boss and, although transitional, each of them has its own specifics.

Knowing if you’d like to be a freelancer, a sole business owner or an entrepreneur may turn out to be crucial for your future efforts and success as it will help you plan accordingly for the right kind of growth, saving you loads of time, money and headaches along the way.


Most people who make the choice to work independently start off as freelancers.

The reasons for that may be different – it may be seeking a better work/ life balance, a wish to perfect your craft and focus on this particular skill or service you are good at, or it may happen by accident while you still have a full time job.

Freelancing is a lot different to a full-time job with regular income to cover all your liabilities. There is no set work schedule to adhere to and no team to work with.

Freelancers often work on their own and may sometimes hire other freelancers or short-term contractors for some of their projects. Essentially, though, they are responsible for finding their own clients, setting their prices and managing deadlines.

Freelancers trade their time for money, they create a job for themselves and if they do not work, they do not get paid.

Freelance work is not scalable and sustainable – freelancers have no long-term commitment to any client and need to constantly be looking for projects. They tend to be particularly good at one skill but not experienced in others, which limits their capacity. Another drawback is that the amount of work and the size of their clientbase is limited by time as there are only that many hours in the day!

From freelancing to owning a small business – how to make it happen?

To begin with, if you want to have a small business, you need to build it larger than yourself. You would be focused on branding, sales, systems and processes to put in action so your business runs smoothly without you being directly involved day in and day out. You might want to think about taking out a loan, such as a loan for the self employed; as a way to help finance the additional costs needed to get to this point

This is the stage when you may take on your first few hires – maybe skilled junior staff you can train up gradually on your own terms.

Instead of you completing projects and being hands-on from start to finish, your efforts would be directed in managing your team to effectively do that.

As a small business owner, you need to feel more confident about your work and trade your services at least at market rate. If, when you were a freelancer, you did not invest in a professional website, now is the time to do so.

Small business owners still need to go to networking events themselves to look for clients, but they are able to pick the projects they want to work on and take on more varied tasks that they used to when they were freelancers.

Entrepreneurship – the ultimate goal

OK, so you have started from a busy do-it-all freelancer and grew your company with a small and trustworthy team. It has been a bumpy journey and you’ve probably had a lot of clients that did not want to pay or that were simply too risky to take on board but yet, you got to this point. What’s next?

If you are wondering about your next step, you are already on the track of entrepreneurship as you are now looking at the bigger picture and what you can do beyond your business.

Entrepreneurs think as leaders and are more prone to take higher financial risks.They have the opportunity to expand their potential further and take more varied and interesting projects. Entrepreneurs are in a position where they can afford to turn down a project they feel won’t bring the business high ROI.

Their mission is no longer simply to figure out how to pay the bills every month but  to solve problems and make the world a better place.

Claire James
Claire James
Claire is an accounts manager at Fire Digital UK, an online publishing and content marketing company based in the North West.

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