Is every freelancer an entrepreneur? 

The short answer is NO.

Now hold up young grasshopper, let me explain. Don’t go into an identity crisis just yet. And more importantly, I will tell you why it’s in your interest to make a deliberate choice between the two.

“But this is just a matter of vocabulary” you say. “Why does it matter what I call my business? After all, both solo entrepreneurs and freelancers fall under the same legislation. Right?”.

WRONG. Even if on paper, freelancers and solo entrepreneurs look the same, your mentality should be vastly different.

So first, let’s talk about what makes freelancers and entrepreneurs different.


How to determine if you are a freelancer or an entrepreneur

The answer lies in your relationship with time. Does your time equal money?

Here are 3 concrete questions to ask yourself:

  Do I make money while I sleep?

  If I were to drop off the face of the earth tomorrow, would my business still have value?

  Can I sell my business?


If you answered YES to all these questions, congratulations! You may call yourself an entrepreneur when people ask what you do for a living at dinner parties. You have our blessing. 

But chances are, you are reading this post because you are at the beginning of your freelance journey and have not spared a thought for your business strategy yet.

I am sorry to break it to you, but as a new freelancer, you are more like an employee than an entrepreneur, albeit an enlightened one. You sell your hours in exchange for money. How much you work is directly correlated with how much you earn. Essentially you employ yourself. It important for you to understand that at this point you and your company are synonymous. Your personal brand is your company’s brand. The difference between you and an actual employee is that you’ve now taken on some of the more tedious tasks that an employer usually takes care of, such as client acquisition,  accounting and goddam taxes. 

I know what you’re thinking: “But I’ve worked so hard to be independent, to have control over my own hours! I have the mindset of an entrepreneur and I get to decide what I work on!” 

This self-aggrandizing bubble is one I would like to burst, unfortunately. Freelancing can turn into a business, but it is not so by default. And confusing the two can hurt your business in the long run.


The 6 differences between freelancers and entrepreneurs

1. Thinking vs strategizing

A freelancer uses tactical thinking. Your work expands one client at a time. Your goal is to meet or exceed expectations on each singular project. An entrepreneur is a visionary, a thinker and a strategizer. You are concerned with exponential growth and systematizing your operations.

2. In vs on business work

A freelancer works in the business. An entrepreneur works on the business.

3. Real work vs administrative work

As a freelancer, your “real work” consists of the deliverables you create for your client. Everything else, like invoicing, budgets, and business plans are unfortunate necessities. An entrepreneur concerns himself mostly with these unfortunate necessities as they provide the structure upon which any business rests.

4. Risk aversion vs risk tolerance

A freelancer is risk-averse. You expand your work gradually and steadily, within well-known personal capabilities and based on previous work. An entrepreneur is risk-tolerant. You understand your risk and work to maintain it within reasonable parameters.

5. Number of clients vs many factors

A freelancer measures success in terms of number of clients. An entrepreneur views success from a 3-dimensional perspective, considering many factors.

6. Work-life balance vs life-consuming

As a freelancer, your work does not equate your life. You seek freedom and control over your work hours in order to achieve a better work-life balance. As an entrepreneur, your self-conception is embedded in your business. You want to build something bigger than yourself, with lasting impact.

Of course, there are also inbetweeners: freelancers with a growth mindset, who work to build a structure within their business and occasionally hire other people. Or maybe you are working towards turning your one-man operation into an agency. On the other side of the spectrum, there are entrepreneurs that lack vision or desire for growth.

Above we merely painted a picture of the 2 extreme ends of the continuum between entrepreneur and freelancer.

Which leads to the next question you should ask yourself:


Do you wish to be an entrepreneur instead of a freelancer?

If your goal is independence and you have a skill that is in demand, then freelancing is the way to go, simply because it is a low-risk way to get started. You will get paid on day one and will be able to take on more clients when you feel ready. It’s a no-brainer.

Your immediate goal is to become more valuable by improving your skills, expanding your service offering and lessening the decision-making burden for your clients. Essentially you will become really good at one thing, and you will repeat that over and over again.

Doesn’t sound like a whole lot of independence? That’s because the client is still in charge. They decide what you work on to a certain degree. Even though you will be able to select clients you like to work with, you will still have to adapt to their business structure, their way of running a business and their values.

Nothing wrong with that. If you derive joy out of honing your craft, perfecting your capabilities and like the idea of having control over all outcomes, then freelancing offers great freedom and moderate to high reward, without great responsibility.

In fact, we are here to tell you that the potential high rewards of becoming an entrepreneur do not always warrant the stress of running a business. It takes a special kind of person who is willing to sacrifice their personal life, in favor of building up a vision in the form of a business.

Here’s one last thing to consider: even if you decide to start off slow, dip your foot into the so-called “financially free” lifestyle by becoming an entrepreneur, you can always evolve your one-man operation into a full-fledged business. You can do that once you’ve understood the ins and outs of your clients’ needs and problems, once you’ve worked with all sorts of people in your industry and once you’ve got the hang of managing all the tedious business necessities by yourself. Then you can start a business with the knowledge that you are solving a problem you understand deeply.


If you have made it this far through the blog…

Chances are that you are seriously looking to start your freelance journey or improve your freelance business. That’s great we are here for it!

Phanum team

At Phanum, we aim to support you at the beginning of your freelance journey by taking care of the more daunting tasks of freelancing: finding work, project management, and learning new skills. Get in touch to learn more!

Click this link to sign up as a freelancer at Phanum!