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The Wide Chasm Of Difference Between Freelancer And Entrepreneur

Within the past few weeks, a number of people have asked me for advice on growing their businesses. The question I ask before giving any advice is whether one wants to be a freelancer or entrepreneur. When I started my first business I was a freelancer. Today, I’m an entrepreneur, building my third business.

The chasm between freelancer and entrepreneur is wide and deep. Let’s look at why.

Warning: this is a long article (more than 1600 words). Before commenting, please read the entire article, and then leave a thoughtful comment with your thoughts on what is written. Purposefully inflamatory comments or those that do not add to the conversation, such as critiquing the article but not providing any arguments, will be deleted.

With that said, let’s have a conversation.

Definitions We’ll Be Using

For the purpose of this article, we will leave dictionary definitions aside and use these two:

Freelancer – a self-employed individual who seeks to remain self-employed in a profession of his/her choosing.

and

Entrepreneur – one that builds a business greater than oneself, and creates value beyond what an individual can provide.

With those definitions in hand, let’s look at examples.

Example A: Freelancer

I started my first business when I was 22. I was doing IT work – building and supporting IT networks and computers – and running around the DC-MD-VA area. After 12-16 hours of performing IT work, I would return home, where I had to do all of the finance, marketing, sales, and other work involved in running a business.

I also formed strategic alliances with companies so I could provide more services than I myself performed. This included things like web design, web development, computers, firewalls, and much more.

It was during this time that I obtained many Microsoft, networking and other computer certifications.

I was, by definition, a freelancer.

Example B: Entrepreneur

My second business – Atlantic Dominion Solutions (the name of which I continue to use today) – started as an IT services firm in Florida, but quickly morphed to a web development firm. We built custom online applications for companies that ranged from startups to Fortune 50 clientele (Chrysler was a client for a two years).

Within a year-and-a-half of quitting my job and doing the business full-time, I had 9 full-time employees on payroll and more than $500,000 in yearly revenue.

In addition, I:

  1. Held a developer conference 2 years in a row with more than 150 attendees each year
  2. Taught web-development classes
  3. Sponsored developer conferences in the U.S. and Europe
  4. Spoke at developer and project management conferences in the U.S. and Europe
  5. Built 3 online applications and sold two (Scrum’d, Expens’d)
  6. Performed project management consulting for an Inc. 500 company

This was on top of obtaining multiple project management certifications.

I say this not to brag, but to show the major difference in approaches. When I was a freelancer, the value I created via my business was limited to what I myself could do. With the web development business, I was able to work with a Fortune 50 company, hold a yearly conference, build and sell products, and much more.

The Current State of Dempsey Marketing

Today at Dempsey Marketing we have a team of 10, including my wife and myself. We grew from an individual – me – within the past 5 months.

This past weekend, while working with Lauri and the Saltar Solutions team, we helped Dean Hyers achieve #1 rankings in 3 categories on Amazon for Winning Presence for Business Presenters. 4 days after launch, it continues to hold those positions.

I just published our first Entrepreneur Guide: Quickly Create A Website To Generate Leads. It is the first of many such guides to be published on the Kindle.

We hold monthly webinars, post between 3-7 times per week, and are increasing the number of clients that pay us on a monthly basis to perform all their marketing. We are also fortunate to have a client who has transformed the lives of literally tens of thousands of people.

We would not be in a position like that today if I was acting like a freelancer – I have to be an entrepreneur. That statement brings me to the point of this article.

The Commonalities Between Freelancer And Entrepreneur

Regardless of which path you choose, there are things you need to learn and constantly improve on:

  1. Marketing your business – keep new business coming in
  2. Sales – turning leads into clients
  3. Finance – a lack of cash will kill a business faster than you can say “oh shit I’m broke.” You need to be able to control your cash flow, and that means being able to keep track of what’s coming in and out, and reading financial reports for the business.
  4. Operations – streamlining processes so you can provide a higher level of service to your clients
  5. Account management – keeping clients happy means you keep clients, and your business continues to exist
  6. Service – whatever service you provide, you need to get better at your craft
  7. Product Development – if you create products in addition to or instead of services, you need to continuously improve the products

That’s a large list, and, in my opinion, why a lot of businesses fail – they fail to grasp the totality of what is required to run a business. It’s why, when I had my first business, I would burn out on every 3 weeks – I was trying to do it all.

Your approach to this is one of the major factors between your being a freelancer or entrepreneur.

The Freelancer’s Approach

A freelancer will look at that list and perhaps outsource one or two things. He might find a book keeper and a CPA. Regardless though, he will continue to do a bulk of the production work.

The freelancer won’t always value his time beyond the hourly rate he charges clients. For instance, when working with a client, you have the overhead of:

  1. Your website
  2. Project management systems
  3. Time managing the project – communications with your clients, subcontractor and partners
  4. Software and hardware to perform services
  5. The marketing it took to get the client in the first place
  6. The sales time it took converting that client from a lead

And then freelancers wonder why they’re working like crazy and aren’t making enough money…

The mindset of a freelancer is very telling. For my Life Of The Freelancer project (now closed), I interviewed more than 200 freelancers in a variety of industries. After attracting more than 2000 daily visitors to the site (a year-and-a-half ago), I found a major flaw in my monetization strategy: almost every freelancer I encountered saw themselves not as someone building a business greater than themselves, rather they defined themselves by the job they did – web developer, web designer, accountant, etc.

The chasm between freelancer and entrepreneur is one of mindset, and the resulting action.

The Entrepreneur’s Approach

When I changed my focus from serving freelancers to serving entrepreneurs, an entirely new world opened up, and has allowed me to take Dempsey Marketing to where it is today. And we continue to move forward.

Entrepreneurs see things differently. And while many began as freelancers, they have leaped across the chasm. Here are traits I see in all entrepreneurs:

  1. They are not defined by their business, rather they define their business based on how they want their life to be. How they do is more important than what they do.
  2. They surround themselves with individuals smarter than themselves in various areas, and acknowledge this fact.
  3. They focus on creating scalable business systems in order to create greater business value.
  4. They do little to no of the hands-on work of the business.
  5. They create the larger vision for the business, and ensure that each person that works within the business is aligned with that vision.
  6. They are always seeking new opportunities, but remain focused enough to ensure that opportunities they currently exploit don’t fall by the wayside.

The greatest trait of entrepreneurs is this: they think really really big, and act on that thought.

  • Andrew Carnegie sought to mass produce high-quality steel, and built “the most extensive integrated iron and steel operations ever owned by an individual in the United States” (Wikipedia)
  • Henry Ford sought to create an affordable car that every American could buy. More than 109 years later, Ford Motor Company continues to produce American cars.
  • Steve Jobs sought to combine liberal arts with technology, and put a computer in every home. He used this philosophy to literally change the computer, music, and mobile phone industries.
  • Richard Branson built the Virgin Group from a company hand-delivering records from a basement office to more than 300 businesses.

Not all entrepreneurs are business people:

  • Florence Nightingale is considered the founder of modern nursing
  • Juliette Gordon Low founded the American Girl Scouts
  • Maria Montessori is famous for her work in the education of young children, a method used in Montessori schools today
  • Susan B. Anthony was a tireless campaigner for gender equality and inspired a nationwide suffrage movement. (U.S. History)
  • Harriet Tubman led more than 300 slaves to freedom
  • Martin Luther King Jr. was assassinated during his quest for black equality in the United States

Do you have to be these people to be an entrepreneur and wildly successful? No. However, you must think bigger than yourself.

Your Choice: Freelancer or Entrepreneur

Today you have a choice between two very different paths: freelancer or entrepreneur. While many of the skills you acquire on these paths are similar, the mindset with which you approach your business is very, very different.

If you simply want to work for yourself, you can choose either road.

If you wish to hone your craft and do the job you do, not growing beyond yourself and perhaps a subcontractor or two, you’ve chosen the path of a freelancer.

If however you’ve chosen to build something larger than yourself, to create greater value than you yourself can provide, to leave behind most of the day-to-day hands-on work of the business, to surround yourself with people more knowledgable than you in many areas, and drive it all forward with a vision that will knock most people on their ass – you’ve chosen the path of the entrepreneur.

Many years ago while building my web development firm, I realized I had to make a choice. On the one hand, I could become the best web developer I could be. On the other, I could learn more about business, and for the most part set aside creating code and focus on building a company. I chose the later.

Which do you choose?

Comments

  1. Hi, Your post saved my sanity, Robert. Since 1999 my husband and I have an SEO business and occasionally really get in to “discussions” that get pretty heated. The other day he finally shouted, “All you want to do is tell people what to do.” So I said, “Yes, figuring out what needs to be done next and then figuring out who would be best at doing it is my greatest talent. Sometimes it means you need to do it; sometimes I need to do it; sometimes we need to get someone else to do it. What’s wrong with that?” He didn’t have an answer and we both felt bad. You, Robert, put all this in quickly understandable language: my husband has a freelancer world view and I have an entrepreneur world view. Neither is wrong, just different. Explains why he is so talented at SEO and why I’ve been involved in over 35 businesses in some way over the years. Thanks for the help!

    • I’m very happy I could help Shirley.

      I appreciate how you said that neither viewpoint is wrong, just different. That is very, very true. And it’s great that you can acknowledge that the difference is there. Now that you realize it, you can alter how you approach him, and perhaps become even more successful. Fantastic stuff!

      Thank you very much for sharing your experience.

    • Hmm it appears like your wbesite ate my first comment (it was extremely long) so I guess I’ll just sum it up what I wrote and say, I’m thoroughly enjoying your blog. I too am an aspiring blog writer but I’m still new to the whole thing. Do you have any tips for first-time blog writers? I’d really appreciate it.

  2. Wow…going from just you to a team of 10 in 5 months is REALLY impressive. Congrats on the fast success (although I know that didn’t come without it’s efforts).

    Makes me feel like I need to get my shit together. So thank you :).

  3. I find that having a partner from the beginning forces one to break from the Freelance mode and shift into entrepreneurship mode. That being said, if you stall or can’t scale the business (point #3), it’s easy to quickly fall back into freelance mode where you trade your time for revenue…
    I find scaling to be the most challenging aspect of entrepreneurship.

    • That’s an interesting point Vince. As as for scaling, it’s about creating repeatable processes, and predictable sales.

      • True Robert.
        Quick question: Does your company offer that kind of services? (helping restructure processes, create market strategies, etc…). Also, do you guys work with startups?

        • At Dempsey Marketing we specialize in 3 areas:

          1. Crafting websites that generate leads and sales
          2. Product launches
          3. Marketing campaigns

          And we do work with startups. Call Hugh at 800-921-1274 and he’ll be happy to help you.

        • I don’t know if it’s that cut and dried John. I think it has more to do with direct sereicvs requiring the individual’s constant time and focus versus stand-alone products that sell themselves.Just because an Entrepreneur is a one-person show that might not pull in the level of sales or have the visibility without their efforts doesn’t necessarily mean ipso facto that person is a Freelancer.The question becomes one of: Are you selling just yourself and your expertise or are you selling a product backed by your expertise?So if you subtract yourself and your own expertise from what you’re marketing, what you’re left with is either nothing (Freelancer) or a product/service (Entrepreneur.)

  4. I’ve been freelancing for about a year and fall firmly into the camp of someone wanting to stick with it vs moving into entrepreneurship. I like the greater simplicity of it – the idea of taking responsibility for issuing regular paychecks, providing healthcare and the mass of additional paperwork that can come with hiring employees makes my head spin.

    It’s definitely a good move for some people, but there are different skills to managing people and running a business that those with the proper skills to freelance don’t necessarily come equipped with. Are you good at balancing all the different aspects of running a business? Are you good at hiring? Delegating? Being the right mix of asserting and encouraging to get the level of consistent, quality work from employees required? The list goes on…

    I’m happy sticking with the responsibility of doing good work for clients and getting better at my work as I go.

  5. I enjoyed reading this post a lot because I’m just on the treshold of becoming an entrepreneur.

    For the most part of my career I’ve been working as a freelance web developer, but many times I noticed that without a team I cannot accomplish the task the way I want at the speed I desire, resulting in what you described as a typical freelancer’s symptom of being exhausted and getting too little money in return.

    I really liked the advice of leaving behind the day-to-day work and focusing on bigger things because personally I’ve never been a big “delegator”, part of the reason being that I’m most of the time the only person who is “into” the code.

    However I’m already practicing this kind of behavior change by “outsourcing” little things like – don’t laugh at me – letting a maid clean the house or let somebody else take care of the laundry. My main idea is learning to give away responsibility and not doing everything on my own, so that I can eventually hire people to take over some of the tasks.

    Thanks for these inspiring insights.

    • There’s a reason why both Steve Jobs always wore the same thing Marcel, it’s the same reason President Barak Obama also wears the same two color suits – so they can keep their minds fresh for more important decisions. I definitely won’t laugh at the fact that you made a smart decision – to get help with other aspects of your life so you can focus on growing your business. That’s a very good decision.

      Delegating was one of the things I had the hardest time with. When you’re the one doing all the work, you know the quality of the product. Trusting someone else to do that when it’s your name and reputation on the line can be difficult at best. Over time it gets easier, as you verify that the work is up to par, and gain more happy clients.

  6. This post confirms the reasons why I haven’t managed to achieve most of my goals regarding business. I have been doing the so-called “trading dollars for hours” for a very long time. I have done freelance work as a translator, web developer, network and system administrator. Not long ago I had a change of mind-set and I am already seeing the benefits of thinking like an entrepreneur. Better late than never, as they say.

    • Hi Churchill – thank you for adding your experience. I’m very happy to see that a change in mindset has created a positive change in your business. Many never make that shift and stay stuck where they are, unless of course they purposefully choose to remain there, which is a choice too.

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