I wore both hats in the past two years after I left my corporate job. I failed in my startup attempt, but I enjoyed entrepreneurship more than freelancing. Here, I’d like to share my understanding and you can decide which one is better for you.
Entrepreneurship is juicier and more complex
It starts with an idea. You think about solving a critical problem day and night. You take ownership of solving the problem for changing the world with expectations of making a lots of money.
You become a problem solver from a idea person. The journey of entrepreneurship begins.
Freelancing is simpler and more direct
Freelancing is primarily about making money without worrying about solving the critical problems of the world. You care about the quality of your own work. You set a price of your work on project basis or hourly basis. You deliver work on time and get the money.
Entrepreneurship is risky.
You take big financial risks (with your money or an investor’s money), career or opportunity risks, and emotional risks. Your family also takes an equal risk.
Freelancing is risk-free
The risk in freelancing is limited to finding and retaining clients. You can always replace clients.
Entrepreneurship rewards in the long run.
You make big money if your business takes off. In the process of building a business, you create assets that belong to you and your organisation. However, entrepreneurship is not a cakewalk; everyone talks about the shiny side, but no one tells you about the dark side of entrepreneurship.
Freelancing gives instant gratification
Freelancing gives you money for every assignment that you finish. You get a continuous stream of money every month. But you don’t create any long-term assets, except, of course, an increased skill at your work. The only way to get more income is to increase the price of your services.
Entrepreneurship is unpredictable and full of surprises
Your business could be thriving today and in deep water next month.. You control a part of your business, but the rest is controlled by market behaviour. As Nokia’s ex-CEO Stephen Elop said, “We did not do anything wrong but, somehow, we lost”.
Their business lost because the smartphone market took a shift and they failed to align their products with the consumer’s need.
Freelancing has predictable results
Freelancing is always cash positive. There could be ups and downs in the freelancing business, but you never go into losses.
Entrepreneurship is team work
You cannot do everything on your own. You have to build a team of best people (hire people even better than you).. A perfect team for the software product business has a developer, a designer, a growth hacker, a sales guy - and YOU, who will hold them all together. A solid team can make a business and a weak team can break it. You have to learn how to hire, motivate and retain the best talent.
Freelancing is an individual’s game.
In most cases, freelancers don’t need a team. They may need a little bit of help to improve the outcome of their work, in which case they could hire another freelancer. For example, a writer may need to hire an editor for his articles and a designer to make graphics.
Freelancers do the job of their core work (such as writing) along with marketing, sales and customer support. They can manage everything by themselves because they have to handle only a few clients.
Entrepreneurship is about products
In almost all cases, entrepreneurs make products or sell services as products. Flipkart, Zomato and Paytm are examples of products that facilitate the selling of services (product discovery, processing and delivery).
Freelancing is about services
All freelancers provide one core service as their strength. A freelancer provides service as a writer, designer or trouble shooter. They excel in one skill and provide the best service in their area of expertise.
Entrepreneurship is about finding a gap in the market
You think broad and find a compelling problem to solve. You understand the needs of your customer very well and come up with an excellent product to solve the issues of the market.
Freelancing is about finding the gap in a project
A freelancer fills up the gap with his skills. You bring a project to completion and that helps further bring the product to completion. Freelancers support entrepreneurs in their attempts to fix the bigger issues of the market.
Entrepreneurship is for dreamers
Entrepreneurs are mad about their dreams. Sometimes their dreams come true and 99 percent of the time, they fail. They don’t get discouraged with failures; rather, they learn from failed attempts and stand up again with better versions of themselves.
Freelancing is for artists
A writer is an artist who does magic with his words. A designer is an artist who tells a story visually. A video animator, a music player, and even a freelance developer work as artists who are excellent in their work and fix your problems.
Entrepreneurship is for generalists
You may be an expert in one area, but you have to wear lots of hats in entrepreneurship. Your primary work is to make things happen with the help of specialists. You figure out how to get the resources that your team asks for. All specialists become generalists in entrepreneurship.
Freelancing is for specialists
You have to be a specialist in freelancing. Marketing guru Seth Godin suggests that if you want to become freelancer, then become remarkable in your work. Be in that top 0.1 percent in your field and clients will come to find you. In that position, you may charge premium for your work and people will gladly pay you.
Note: don’t confuse entrepreneurship with business ownership.
You can open a shop for your son, source the products, and your son can start making money. Your son is not yet an entrepreneur. He is a business owner, he is a boss. He might make good money, but he is not risking his time, money and resources to make a better world. He is just a trader of goods, the way a freelancer is a trader of his services.