How Freelancing is the First Step Towards Entrepreneurship
Filed Under: Freelancing
When I first started writing this article, I thought it would be an easy piece of work. But this is a lot more complex than I first thought.
Let’s start with what life is like for most people. When you work for someone else:
- You have a job and you are at the beck and call of your boss.
- Your boss expects you to give 100% of your life to your job.
- Your job is dependent on profits and returns to investors.
- You will lose your job at the first sign of falling profits or returns.
Why anyone puts up with working for someone else is one of those ideas that beggars belief, which is why being a freelancer is such a great option. A job means you have little to no control of your own life. Freelancing allows you to take back that control.
Most people become freelancers for a couple of reasons. They no longer want to work for someone else or they get fired and can’t find another job. Either way, finding work becomes a necessity and freelancing is a quick way to do it.
But how does freelancing lead to entrepreneurship? If being a freelancer is just about NOT having a boss, why do freelancers become entrepreneurs?
In reality, there is little difference between a freelancer and an entrepreneur. Freelancers already have the entrepreneurial spirit. If they didn’t, they would happily continue working the 9-5.
What separates an entrepreneur and a freelancer is that an entrepreneur has worked out how to get paid enough so they can pay other people to do the work that they should be doing. “Uh?” I hear you saying. Let me explain, and I may need you to bear with me here because it might get a little complicated.
Let’s take the example of a freelance graphic designer (GD), but let’s add reputation into the mix.
There is a point where freelance GD delivers and what her clients want matches perfectly. However, the price has become fluid because of her increasingly good reputation.
Freelancer can now increase the price she works for (as her reputation has increased), but can continue to produce the same quality of work.
Then, she has a ‘eureka’ moment.
She realizes that all she needs to do is subcontract the work to another graphic designer (who can do the same quality of work) for the old price. She can now pocket the difference without having to do any work at all. And she becomes an entrepreneur.
Here is the math with logo design as an example:
Old price of logo design: $50
Increased price of logo design: $60
Subcontracted GD price: $50
Profit for our new entrepreneur: $10
Our new entrepreneur is not making nearly as much per logo, but she doesn’t care. She can find as many graphic designers as she wants, pay them $50 bucks, and pocket the $10 difference for doing nothing.
Of course, she is not doing nothing. Her graphic design work has morphed into sales and marketing. She has now become a true entrepreneur. And she can now scale up her business because of her sales and marketing.
When she was designing the logos herself, perhaps she could do five a day. Now she has people working for her, she can produce 10, 50, or 500 a day. There is no limit because she is no longer designing.
What is the lesson we have learned here?
In reality, freelancing is NOT the first step to entrepreneurship. The lesson here is that entrepreneurship is the natural next step for any freelancer who wants to achieve real success.
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