Freelancer vs. Business Owner: Is There a Difference?

There are many similarities between being a freelancer vs. a business owner. Whichever path you choose, you’ll get to be your own boss. That means having the freedom and flexibility to pursue work you’re passionate about, set your own rates, and control your time.

However, there are also significant differences between the two options. In this post, we’ll explore what each option involves to help you decide which is the better choice for you and your career.

What Is a Freelancer?

A freelancer is a self-employed individual who makes money by offering their skills and services to multiple clients. Freelancers will often work on simultaneous multiple projects, which could be short-term or long-term.

Freelancers don’t generally hire employees (but they may outsource work). This means that they are responsible for sourcing their own work, setting their own rates, and handling all administrative tasks (e.g., invoicing).

Pros of Freelancing

There are many benefits to being a freelancer. Some of them include:

• Control over business decisions. You make all the decisions regarding your freelance business. You can choose the people you want to work with and the projects you want to work on. If a client is showing lots of red flags, you can wind down your work with them. 
• Control over your earnings. You get to set your own rates and increase them as you gain experience (without having to wait for your boss to give you a raise or promotion).
• Better work-life balance. As a freelancer, you have full control over how and where you spend your time. You can set your own working hours and work from any location – at home, in a coworking space, on a plane – that suits you. All of this makes it easier to achieve a good work-life balance.
• Freedom to pursue your passions. It’s completely up to you which services you offer and which projects you take on. You can pursue work that’s engaging and that you genuinely enjoy.
• Low overheads. There isn’t much overhead involved in being a freelancer. Of course, there are expenses (such as buying your website domain or paying your taxes), but you don’t have to worry about costs such as renting an office space or commuting.

Cons of Freelancing

No single career path will be suitable to everyone, and being a freelancer does come with some drawbacks. Here are a few things to be wary of:

• Financial instability. As a freelancer, you have to source your own work. The workload can vary from month to month, and so can your income. You’ll need to make sure you have a plan in place – for example, a buffer or an emergency fund – to cover you in quiet periods or at times when you can’t work (e.g., if you’re unwell).
• No benefits. Freelancers do not receive paid holidays, sick days, health insurance, or performance bonuses.
• Isolation. Working by yourself all the time can be lonely. If you want to connect with others for support or mentorship, you’ll need to put in some extra effort to make connections.
• Responsibility. Freelancers are responsible for all aspects of their business, from marketing and invoicing to client management and administration. These tasks can be time-consuming and overwhelming – especially when you’re just starting out.

What Is a Business Owner?

Lots of people are drawn to the challenge of building their own business from the ground up. Like freelancers, business owners make money by selling products or services. However, unlike freelancers, they usually employ other people to help them. They might have a brick-and-mortar storefront or an ecommerce website.

Pros of Being a Business Owner

As a business owner, you get to pursue your passions and enjoy a lot of the control and flexibility freelancers have. There are other benefits also:

• Control. As the boss, you get to make all the big decisions. You can decide where, when, and how your business will run. You can handpick the people you want to work with to build a successful team.
• Personal satisfaction. Growing a successful business and seeing your dreams turned into reality are great for your self-esteem. Plus, providing a great product or service and seeing people benefit from it can be highly rewarding.
• Financial rewards. If your business does well and grows in value, you’ll earn a higher income.
• Social impact. Not only can starting a business be beneficial to you; it can also stimulate your local economy, provide jobs, and inspire others in your community.

Cons of Being a Business Owner

Starting a business isn’t without challenges. It generally requires a lot of time and hard work to create a successful, profitable business. Make sure you’re aware of the potential challenges:

• Financial risk. There’s no guarantee that your business will be successful. Even if it is, you’re likely to face irregular income in the early stages.
• Higher overhead costs. Starting a business will always require an up-front investment. You may choose to hire employees, and you’ll be responsible for them as well as all the costs associated with running your business. 
• Commitment. You’ll need to put a lot of time and effort into starting your business and building it into something from which you can profit. Doing this might mean you’ll have less time for friends and family.
• Stress. Dealing with the uncertainty of success, having less time for loved ones, and taking on the responsibility of starting a business by yourself can often lead to worry, anxiety, and possible burnout.

Freelancer vs. Business Owner: Which Is Right for You?

Deciding whether to be a freelancer or business owner will depend largely on your personal preferences and the type of business you want to create. When deciding which option is better, consider the following:

• What skills and experience do you have? Do they align better with freelancing or running a business? 
• How much money do you have to invest? How much financial risk are you willing to assume? 
• Do you prefer to work alone, or do you like to work with others?
• Would you be comfortable hiring, training, and managing others?
• How much flexibility do you need? Is work-life balance a priority?

Becoming A Freelancer

If you think that the freedom and flexibility of being a freelancer is the right choice for you, check out our CPD-accredited courses. We can help you kick-start a flexible, fulfilling, new career in proofreading, editing, writing, and more.

Don’t worry if you don’t know which one of these options is right for you. Take advantage of our free lessons and start learning today!

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Best Practices for Client Onboarding How to Pick a Niche as a Freelance Proofreader or Editor Freelance Tips: How to Prepare for a Christmas Break 5 Financial Planning Tips for Freelancers