Freelancing and entrepreneurship are two distinct paths to creating a business and generating income. They differ in the level of control, risk, and involvement that comes along with each.
Below, I’ll compare the two in detail so you can understand the main differences between entrepreneurship and freelancing. However, it’s worth noting that you can be both! Freelancers tend to have entrepreneurial traits, but in this article I’ll treat them as two separate career paths.
The 8 Key Differences Between Freelancing & Entrepreneurship
One of the key differences between freelancing and entrepreneurship is the level of risk involved. Freelancers usually take on short-term, project-based work that has a lower level of risk compared to taking on long-term business ventures as an entrepreneur.
When it comes to freelancing, the risks are relatively low because you’re only committing to a specific task or project for a particular amount of time. The client may choose not to continue working with you after your contract ends, but there isn’t much financial risk in this type of situation since you have already been paid for your work.
Even if you don’t get paid (which is a real risk with freelancing), it’s usually not going to be for something that you were working on for many years, which can be the case with entrepreneurial endeavors.
Entrepreneurship involves taking larger risks than freelance work does due to its longer term nature and higher levels of involvement. When starting up any kind of business venture, there is always a chance that things could go wrong, which would lead to financial losses and possibly even damage your reputation depending on how public the failure was.
This makes entrepreneurship significantly riskier than freelancing, but it also offers the potential for bigger rewards if done successfully. Entrepreneurship is also riskier just because it often takes longer for things to bear fruit. Even if you’re only carrying out small freelance projects, it’s typically going to offer at least some income. Entrepreneurs may work on their business for years before it makes them any money.
2. Control & Involvement
The level of control and involvement in a project is another major difference between freelancing and entrepreneurship. When freelancing, you are typically hired to complete specific tasks or projects with input from the client on how the project should be carried out.
This gives the freelancer a great deal of autonomy and freedom to work however they see fit, but they still have someone providing guidance at least about what the end result should look like. Clients may also provide ongoing feedback to keep the freelancer on the right track.
However, when it comes to entrepreneurship, you need to take far more control over all aspects of the business – from product development to marketing strategies – which requires a significant commitment of time and resources. As the leader of an entrepreneurial venture, you are responsible for making decisions about all aspects of the business and you must be prepared to accept any consequences that come along with those decisions.
Freelancers have to control aspects of their business as well of course, such as accounting and finding clients in the first place. But there’s no doubt that an entrepreneur very much has their destiny in their hands, with little to no outside guidance of how to proceed in many cases.
Freelance work usually involves smaller projects that are completed over a short period of time, while entrepreneurs often take on larger-scale business ventures with long-term goals in mind. This difference in scale can have an impact on the risks involved, level of control, and overall involvement you need to have.
A freelancer may be hired by a client for a few hours or days to complete specific tasks such as writing articles or designing websites, but these types of engagements don’t require any long-term commitments from either party and can be easily wrapped up once everyone is satisfied with the results.
Because freelancers must handle things on a project by project basis, there is also limited room to scale their operations. While you can outsource tasks, you’re going to be limited by how much work you can do in a given timeframe.
On the other hand, entrepreneurs often take on more ambitious projects that involve significant investments, both financially and emotionally, due to their longer term nature. Entrepreneurs tend to just be working on ‘bigger’ things than freelancers.
Entrepreneurship also offers more potential to scale the business. If things go to plan, an entrepreneur’s business might involve many different people or organizations all working together, which can develop into a very big operation. Many of the world’s biggest companies start this way, with one person initially applying their entrepreneurial skills to create something huge out of seemingly very little.
Freelancers can obviously reach very high summits as well, but in most cases they will simply work for themselves, taking on a few clients at a time. Earnings can be very high, but the overall scale of operations tends to be smaller.
Freelancers are typically paid on a per-project basis, and the amount they earn is defined by the scope and complexity of the project. The main way to earn more money as a freelancer is to either increase your prices or take on more clients. You can definitely earn a good wage as a freelancer, but there is a ceiling to how much you can charge, and this will vary a lot by industry, location, and your level of expertise.
In contrast, entrepreneurs have a more significant financial stake in the business they operate, which means that their potential rewards can be much greater if their venture is successful. They can of course also be much lower if things don’t go to plan!
Entrepreneurs can reap the rewards of their business in various forms, such as financial profits, equity ownership, brand recognition, and market share capture. On the other hand, freelancers don’t have any long-term stake in the projects they work on, and the earning potential is limited by the amount of projects they can take on at one time.
Both freelancers and entrepreneurs typically don’t have much access to support, so this is more of a minor difference, but it’s one to consider nonetheless.
Freelancers usually don’t have access to any kind of external help or resources, whereas entrepreneurs can often benefit from a wide range of support services. This difference in support can affect the amount of time and resources needed for each type of activity, as well as their potential rewards and risks.
Freelancers usually have to work independently on their projects since they don’t typically have access to outside help or resources. This means that they must be self-reliant when it comes to completing tasks, managing deadlines, and troubleshooting issues that may arise during the course of their project.
There may be some grants available for freelancers, and there are career support services out there, but generally you’re on your own for the most part.
In contrast, entrepreneurs can often receive assistance from various sources, such as mentors, business incubators, advisors, and investors, which can help them manage their business operations more efficiently. These won’t be available for all entrepreneurs, but many options are definitely more geared towards those with a business or product idea than those simply offering freelance services.
The amount of support an entrepreneur receives will largely depend on their own initiative and the people and networks they set up around them. Entrepreneurs will need to go looking for the support if they want to take advantage of it.
Freelancers usually don’t have the benefit of external resources or support networks that entrepreneurs may have access to, so they must be highly creative when it comes to finding solutions for problems related to their projects. However, the amount of creativity they can actually put into their work will depend a lot on the industry and nature of their work.
Freelancers are usually bound to a set of guidelines from their clients, and so they might have limited creative freedom over how they do the work. Clearly this won’t apply to all industries, as something like graphic design relies heavily on creativity.
By its very nature, entrepreneurship not only allows creativity to flourish, but it’s essential if you want to create a successful business. Entrepreneurs aren’t bound by many guidelines, and the world is really your oyster as long as you have an idea and the means to bring it to fruition.
You may be limited financially, but you can create pretty much any kind of business you want as an entrepreneur. This can make it a very attractive route for creatives with a lot of drive and a winning idea.
Finally, freelancers typically have limited opportunities for making a large-scale impact since their work usually involves completing specific tasks or projects for clients that are relatively short-term in nature. As such, freelance work may not always provide long-term benefits or allow individuals to make meaningful contributions to society beyond fulfilling immediate needs.
This won’t be important for everyone, and many will simply be freelancing in order to provide for themselves and their families. There is clearly nothing wrong with that, and this section isn’t to try and diminish the impact freelancing can have. However, there’s no doubt entrepreneurship can lead to a larger impact on society as a whole.
Entrepreneurs are more likely able to make a greater contribution due their ability to create something new that will provide value over time, rather than simply serving immediate needs like many freelance jobs do. Obviously this will depend on the success of your entrepreneurial endeavors, but it’s easy to understand why an entrepreneur that creates a business – and therefore likely many jobs to go with it – can have a larger impact than a freelancer.
Obviously freelancers can outsource tasks and turn their careers into businesses, but for the most part, impact is more limited. If you want to create something big that has a lasting impact, entrepreneurship is the way to go in most cases.
Now that you know the differences between the two, let’s sum up the pros and cons of freelancing and entrepreneurship.
The Pros & Cons Of Freelancing
The Pros Of Freelancing
Flexibility: Freelancing provides a great deal of flexibility in terms of work hours and location, allowing you to work on your own terms and at times that are convenient for you.
Variety: As a freelancer, you can work on a wide variety of projects, which can be stimulating and help you develop new skills.
Low Startup Costs: Compared to starting a business as an entrepreneur, freelancing has relatively low startup costs, allowing you to get started quickly and without significant investment.
Autonomy: As a freelancer, you have a great deal of autonomy over the work you do and the clients you work with, which can be very rewarding.
No Employees: Freelancing does not require you to manage employees, which can be a significant advantage in terms of time and money. You may wish to expand later down the line of course, but you’re not bound to paying employees from the start.
Work-Life Balance: Freelancing can allow for a better work-life balance, as you can control your own schedule and avoid the stress that often comes with running a business.
The Cons Of Freelancing
Uncertainty: Freelancing can be unpredictable, with fluctuating income and an inconsistent workload.
Limited Growth Potential: As a freelancer, your income is generally limited by the number of hours you can work, which can be a disadvantage compared to owning a business.
No Benefits: Freelancers do not receive benefits such as health insurance or retirement plans, which can be a disadvantage compared to traditional employment.
Isolation: Freelancing can be a lonely job, as you often work alone and may not have coworkers to collaborate with or bounce ideas off of.
The Pros Of Entrepreneurship
Unlimited Growth Potential: As an entrepreneur, you have the potential to scale your business and generate significant income over time.
Autonomy: Like freelancing, entrepreneurship provides a great deal of autonomy and allows you to be your own boss.
Control: As a business owner, you have control over the direction of your company and the decisions that are made.
Rewards: Entrepreneurship can be very rewarding, both financially and personally, as you have the opportunity to create something of value and make a difference in the world.
Impact: You can create something that has a big impact on society, which is difficult to achieve with freelancing or traditional employment.
The Cons Of Entrepreneurship
High Startup Costs: Starting a business can be expensive, requiring significant investment in terms of time and money.
Risk: Starting a business is inherently risky, with no guarantee of success and the potential for significant financial loss.
Complexity: Running a business requires a wide range of skills and knowledge, from marketing and sales to finance and operational management.
Responsibility: As a business owner, you are ultimately responsible for the success or failure of your company, which can be a significant source of stress and pressure, especially if you take on other employees.
Entrepreneurship vs Freelancing: Which Is Better?
The answer to this question is highly subjective and depends on a variety of factors, including your goals, interests, skills, and financial situation. For some people, entrepreneurship may be the best path toward long-term financial stability and independence.
Others may find more satisfaction in freelancing since it offers more flexibility and control over your work-life balance.
Ultimately, both paths have unique advantages and drawbacks that you’ll need to weigh up if you’re considering going down one of these routes over getting a job. There’s no one way to go about either option, and neither is necessarily better than the other!
Freelancing and entrepreneurship are both great ways to take your life into your own hands and make money doing something you love and are good at. However, both also require a huge amount of time and effort to make successful.
While freelancing is perhaps easier to get going, entrepreneurship provides greater potential in terms of your earnings and in the impact of your business on the rest of society.