A lot of people do not know that being a freelancer is different from owning a business. In fact, certain things that apply to business owners will not apply to freelancers. Understanding the difference makes you become very intentional about what you want to identify as. In fact, if you are hoping to build a business or you just want to remain a freelancer, you need to look at this.
A freelancer is someone who works for himself while a business owner owns a business and work for the business. Business owners own a business entity and make profits from the operations of the business but the business is different from their person.
Freelancing has a very little or no risk and there is not much capital needed to be a freelancer. A freelancer can quickly switch to being an employee but a business owner is not like that. Freelancers do the same jobs that employees might do but they work on their own terms, at their own price and at their own agreed times. They are paid immediately for their jobs instead of waiting for a salary.
While freelancers may be building their skills to get better at what they do and have chances of getting more contract, a business owner is building a team of skilled people. It is also good to note that there is a difference between having a skill, having a career and owning a business. Business owners take advantage of the skills of employees but freelancers leverage on their own skills.
A business owner can decide to sell off his business but a freelancer has nothing to sell in the case that they want to stop freelancing. Business owners will not begin to learn every skill available to learn, they create roles for themselves in business.
A freelancer is like a hunter who hunts every day. Some days are good and some days may end without food but a business owner is like a farmer who plants in season in harvests in the season of harvest. The business owner needs some infrastructures and the progress of his crops will increase the value of his farmland. Would they decide to leave the business tomorrow, they would sell their land and the crops together. When they want to sell their business, they have a lot to sell but would a hunter decide to stop hunting, they have nothing to sell but simply switch to another career.
The requirements for becoming a successful farmer are much more than what is required to be a successful hunter. A hunter may need skills in handling guns and traps but a farmer needs not just skill but knowledge on how to use tools, people and weather conditions. A farmer could have people working on their farm but a hunter works alone for himself.
While we have extensively explained the differences, here are a few striking differences between freelancers and business owners.
While freelancers are only responsible for themselves, a business owner is responsible for other people including staff, partners, clients and so on. While a freelancer can simply walk away from a failed project into another career, it is harder for a business owner to just walk away.
A freelancer is not different from his business but a business owner can be a separate entity from his business. While business is treated as a business, a freelancer is treated as the business. For example, Bill Gate is not Microsoft and Microsoft is not Bill Gate but a freelance graphics designer cannot be separate from what he does because he is all there is to what he does.
A freelancer has no boss and is not required to be accountable to anyone but a Business owner though being the boss is accountable to the board, employees, investors, clients and so on.
4. Customer Base
It is true that a freelancer can possibly work for international clients; thanks to various platforms that make it possible. But a business owner has a wider reach because there are more hands and channels through which clients are attracted to the business. A business owner has more customer base than a freelancer.
Freelancers can be carried away when they want to compete with a business owner. For example, a freelancer will do the work of a marketer and when there is not much fund, the freelancer may also want to brand themselves resulting in poor and unprofessional self-service. However, business owners can delegate certain roles to experts while creating a role for themselves and focusing on it.
A freelancer needs to get better every day at what he does. Else, he will be kicked out of the market. On the contrary, a business owner needs to hire the best hands every time. This way, they can benefit from the employee’s skills to stay in business. A business owner has a lot to learn because you can only manage skills and talents when you know a bit of all of it.
While a freelancer is managing themselves, a business owner is managing lots of people who may be potential freelancers but have decided to sign up to belong to a team.
A freelancer owns everything he charges for his services. But, a business owner will pay salary, pay more bills and make more investments. The Business owns the profit while the owner only gets a share and the large chunk of the profit is put back into the business. Business owners will likely place themselves on salary.
A freelancer can decide to switch to something entirely different but a business owner will hardly switch entirely to something different but may simply invest in another business or create a subsidiary.
8. Success factor
The success of a freelancer depends on their skills and diligence but the success of a business owner depends on their administrative ability to manage and lead a team.
Once the freelancer is out of service, his brand is dead! For example, if a freelance baker dies, retire or decides to quit baking, the brand will die a natural death but businesses can outlive the owner because the business is a different entity from the owner. Many businesses today have survived even though the founders are dead.
We hope you now understand the concept better. Freelancing or business ownership? Which one works for you and why? Let’s get your feedback on the comment section.