Freelancer vs Entrepreneur: Which Path Should You Choose?

After a little bit of research, you likely come to the conclusion that there are two basic options for creating your own online business: becoming a freelancer vs an entrepreneur.

From the outside, they can seem very similar. Both are forms of self-employment and ways to earn money online. So what’s the difference? Which one is the right career path for you?

That’s what I want to discuss in this blog post. I’ll share with you the main considerations when deciding between freelancer vs entrepreneur, the pros and cons of each career path, my own experience in both roles, and also a third option to consider.

Let’s get right into it.

What Is the Difference Between Freelancing and Entrepreneurship?

Let’s first talk about how these two career paths differ from each other, so you have a clearer picture of the distinctions.

Working for Others vs Working for Yourself

One of the main differences is who assigns your workload. For example, as a freelancer, you can’t exist in a vacuum. You sell your skills to those who need them. That means, you often juggle multiple clients and projects at the same time.

For example, as you can see from my hire-me page, I work for a number of different blogs and websites as a freelance content writer.

These are my clients, who pay me for what I do for them. Every month, they order a certain number of articles or copy from me and it is on me to arrange my schedule so that I deliver what they need on time (it helps if you know how to stay productive).

So, while as a freelancer, you do work for yourself (as in, you are your own boss), you still need people to hire you for your services. Otherwise, you don’t have a business.

This is slightly different as an entrepreneur. Here, you mainly work for yourself, in the sense that you are the person who ultimately benefits from your efforts and who you create value for. Everything you do goes into your own business, not someone else’s.

Of course, entrepreneurs have customers and clients that they serve as well (because otherwise, you don’t have a business either). But, on this career path, you focus less on building long-term relationships with the people who pay you and instead focus on refining your offer. Your customers also don’t have a direct say in what you spend your time doing.

Selling Services and Skills vs Products

Another difference is that freelance income is usually bound to a single skill or skill set you are selling for hire. Think writing articles, doing graphic design, offering SEO services, designing websites, coding apps, or a mix of related skills and services.

(It’s also important to note that you can work freelance in the real world, e.g. as a landscaper, carpet cleaner, or electrician. It doesn’t have to be digital. However, since this website is all about how to build an online business, that’s what I focus on here.)

As an entrepreneur, on the other hand, you don’t sell your skills directly. You use them to create a product and then offer that up for sale. This can also mean packaging your knowledge into product form, such as an online course. The main difference is that the thing you get paid for is separate from you and people can use and get value from it without your direct involvement.

Entrepreneurs are also more likely to outsource part of their work, either to other self-employed workers or employees. For example, while as a freelancer you might get hired to code an app, the entrepreneur will be the owner of the company that sells it.

Getting Paid per Hour vs Per Sale

Another main difference between a freelancer vs entrepreneur is in the way you trade your time for income. In freelancing, this equation is very direct. You get paid as much as you work, most often per hour or project. However, if you don’t put in the time, you don’t generate any profits.

As an entrepreneur, you don’t have this linear relationship. In fact, ideally, your product generates income independently of your time. Especially if you build an online business and sell digital products, you can literally earn money in your sleep. An online shop is open 24/7 and there are always people awake in the world to frequent it.

As a consequence, freelance income is less scalable. Even if you charge inordinate amounts of money per hour or project, there’s a limit to how much you can work.With a product-focused business, that’s very different. Here, theoretically, the sky’s the limit. You can sell to a million customers, but you can’t service a million freelance clients at the same time.

And that’s exactly the point. You start a business to grow it into a money-earning entity, something that will eventually generate revenue independently of your direct action.

Working With Clients vs Customers

Whether you are a freelancer or an entrepreneur also has a bearing on your relationship with the people who pay you. As a freelancer you have clients but as an entrepreneur, you have customers.

What’s the difference?

You work with a client. That means you do something together. You help them with a project, ask for their input, they ask for yours, you agree on a price, etc.

As a freelancer, you also get to choose when, where, and with whom you work (ideally). However, as settled earlier, you do have to work with someone to get paid.

Customers, on the other hand, are people who buy from you. They see what you have to offer and purchase it. Yes, you might have to do some customer service and answer questions beforehand but it is not a cooperative relationship, but a transactional one.

You also don’t choose your customers (of course, you pick a target group), they choose you instead because you offer something they want.

Flexible Rate vs Fixed Price

The final main difference between freelancers and entrepreneurs is how you price your offering.

As a freelancer, your rate is more flexible. It is about what the market will support, ideally increases over time, and will be different for different services. You also often negotiate your rate with clients until you agree on something you both consider fair.

In an entrepreneurial business, on the other hand, you usually have fixed prices for your offerings. It might be a one-time purchase or a monthly subscription, the price might also change over time, but in general, every customer gets the same deal.

The difference is similar between shopping at a yard sale vs a supermarket. At a yard sale, there are often no price tags and it is much more common to haggle over the price of wares. That doesn’t happen in supermarkets. Here, you see what something costs and either buy it or don’t.

Freelancer vs Entrepreneur: Pros and Cons

Now that we have a better idea about the difference between these two forms of self-employment, let’s examine the benefits and challenges each of them offers. This makes it easier to decide which is the right way to go for you.

Scope of Work: Narrow vs Wide Focus

As a freelancer, you have less to focus on. Your main objective is to get good at the skill you are selling and then market it.

Yes, other things come with being self-employed, such as writing invoices, paying attention to taxes, doing client outreach, and everything else that’s involved with running a business. You also need to continue educating yourself in your area of expertise, stay on top of the latest developments, and keep learning.

However, overall you mainly do that one thing: sell your skills and make sure you complete the work so you can get paid.

Entrepreneurship is similar but not the same in this regard. Instead of a skill, you are developing a purchasable good. This can be much more complex and also require a more focused approach at the same time. A product needs to do the thing you say it does and provide value all on its own. You can’t have back-and-forth communication with your customers like you can when freelancing. So, getting your product right takes a lot of research and speculation about what your customers will like.

In addition, unless you are a solopreneur and do everything yourself, entrepreneurship often involves a lot more management than hands-on work. For example, if you are building a SaaS product, you potentially need to work with freelance coders, make sure you rent enough server space, find and deal with investors, etc.

As a consequence, as a freelancer, you can be more specialized, while entrepreneurs need to be good generalists.

Getting Paid: Immediate Profits vs The Long Game

Theoretically, freelancing is one of the quickest and easiest ways to start a business. If you have a skill that others are willing to pay money for, you can pretty much start earning today. Ask your friends and family if someone needs a website, app, graphic design, or whatever else you are selling, agree on a price, and you are in business.

Sure, there is more to it in terms of the actual process if you want to do it professionally. You need to get a business license, open up a website, etc. but generally, that’s it.

For entrepreneurs, the road to profitability is usually longer. Most products are not developed as quickly. You need to do a lot more work upfront. For example, even if your product is a blog (like this one), it takes time to create the content, market it, have it rank in search engines, etc.

It’s a long-term process and you need to be prepared for it. Plus, it might not even pay off in the end. On the other hand, as mentioned above, profits can also be much larger once you make it to that point.

Flexibility: It’s a Tie, Pretty Much

The level of flexibility of a freelancer vs an entrepreneur is quite similar, at least if we are talking about digital businesses. Both paths offer a high level of flexibility.

As a freelancer, you mostly need a computer and an Internet connection to get started. You can work from home, or work from anywhere, it’s up to you.

There is also lots of flexibility in terms of who you work with, how much you work, and what your schedule looks like. However, that also really depends on the phase of your career since, at the beginning, you often can’t afford to say no to any jobs coming your way.

The life of a digital entrepreneur is not that different. A lot of the above also applies.

However, if you are only an entrepreneur, you are a little less flexible. You have to put in the time to create a product and market it. As long as there is no product, you have no way of earning money.

On the other hand, once you have something that’s selling well, it can provide you with more flexibility than going freelance. A product can earn money independently, opening up time in which you don’t have to actively pursue income. You can use that for developing the business, adding features, etc.

So, as mentioned, the flexibility is similar although not the same.

Control Over Work: Restricted vs Absolute

One of the cons of freelancing is that you can’t always decide what you work on. It depends on what your client wants and needs. In a sense, it’s like having a boss again (I know, I shuddered as well).

Don’t get me wrong. You do have control over who you work with and which projects you agree to (at least, later in your career). However, you do get hired to carry out a specific task and are required to finish it. You might even end up working with an agency and truly get assigned jobs.

That’s not necessarily bad, and you have a lot more say in the matter than in steady employment (especially the power to say no). But you still have to live with the fact that some jobs are more interesting than others and that you can’t always choose.

As an entrepreneur, you don’t have these constraints. You can completely pick your tasks and work on them as you see fit. You are truly your own boss and nobody can tell you nothing (freeeedooom!).

(Whether the tasks you pick ultimately benefit you is another question, of course.)

While what’s on your schedule won’t always be exactly what you want to do, the liberty to choose can be very meaningful and interesting. This feeling of not being bound to anyone is what drives a lot of people to entrepreneurship.

Profitability: Recurring Income and Scalability

One of the downsides of freelancing is that you are essentially building assets for other people. That article, website, or app — you do get paid for it, however, only once. In the end, it will bring long-term value for someone else, not you.

For that reason, it can be harder to build recurring income when freelancing. There are ways, of course, for example, in the form of retainer or service agreements. On the whole, though, you mostly get paid the one time when you finish your work. You don’t earn money simply for existing and people wanting you.

As you can imagine, entrepreneurship, on the other hand, is all about creating recurring income. The whole idea is to build something that will generate money independently of the time you put in.

While there is no guarantee that you will get there, once you do gain a foothold and money starts coming in, the cool thing is that it’s not dependent on your working hours. A product-led business can generate revenue on weekends, holidays, and other times you are not actively in front of the computer. So, if that’s your plan, entrepreneurship might be your calling.

Risk: What’s the Worst That Could Happen?

Is there a difference in risk between a career as a freelancer vs as an entrepreneur?

Well, first of all, neither is without risk. Neither guarantees success. Lots of businesses fail, both freelance and entrepreneurial.

(Keep in mind though that being an employee is risky, too, as we have seen in the recent waves of layoffs.)

In the end, it comes down to the amount of overhead. As a digital freelancer, your main business costs are probably a laptop and what you pay your Internet provider. You might also need hosting and a domain in order to advertise your services, and possibly some software.

So, overall, it’s pretty manageable. Even if you fail as a freelancer, it’s not going to put you head-under-water in debt.

That can be different as an entrepreneur, even a digital one. Depending on your product, you might require more costly infrastructure. Examples include servers, e-commerce software, video hosting services, video equipment, freelancing services, etc.

Sure, there are many ways to keep it lean so there isn’t a lot of financial exposure either. All I’m saying is that entrepreneurship tends to come with more financial commitments. However, in the end, it comes down to the type of business you are building.

In both cases, you run the risk that you simply won’t get to the point where you have the income to pay your bills. That’s definitely a situation I have been in. It’s not great, and I wouldn’t recommend it. However, there are ways to protect yourself from this, and below, I will talk more about it.

The Short Version

For better digestibility, here are the pros and cons of working as a freelancer vs entrepreneur in a handy-dandy chart.

So, Should You Be a Freelancer or an Entrepreneur?

After going through the pros and cons list for working as a freelancer vs entrepreneur, what’s the outcome? Which path is more appropriate for you personally? Let’s summarize.

When to Pick Freelancing

Based on what we talked about so far, you are better off as a freelancer if you:

• Are not interested in the complexity and responsibilities of building a business
• Just want to get paid for your skills, and quickly
• Are more risk-averse and don’t deal with uncertainty very well
• Like working with and for other people
• Are not that interested in marketing yourself or building traffic and an infrastructure for it
• Don’t want to take on sole responsibility for the success of a project

If that sounds like you, you will likely be happier choosing freelancing as your lane.

The Case for Entrepreneurship

On the other hand, being an entrepreneur sounds more like your calling if you:

• Don’t mind risk and uncertainty, you stay cool under pressure
• Like creating, marketing, and selling products and everything that comes with it
• Are happy juggling a multitude of tasks and setting priorities
• Enjoy managing people, outsourcing work, and taking on a managerial role
• Want to maximize the money you can earn and are willing to delay it for a while
• Don’t need to work with people, you are happy selling to them
• Don’t mind being fully accountable for the failure and success of a project

Does that sound like you? Then this might be the right choice. But wait — there is a third option!

How to Get the Best of Both Worlds

When talking about freelancer vs entrepreneur, a lot of people assume that it is a decision with two choices. You can either be one or the other and you have to pick your route and stick with it.

However, that is far from the truth. As you have probably noticed above, there is a lot of overlap between working freelance and running a business as an entrepreneur, especially when we are talking about digital products and services.

Enter the Freepreneur, the Entrelancer

Consequently, what I would recommend is a middle path, a hybrid model. If I could start again from scratch, here is what I would do:

1. Start as a freelancer (preferably part-time) — Becoming a freelancer is a great and fast way to get started running your own business. You can even do it on the side. If you can, get a “normal” part-time job and start freelancing during the other half of your day until your self-employment can replace or surpass your steady paycheck.
2. Build knowledge and expertise — In your freelance job, you now have two objectives. The first is to level up your skills and get good at what you do. The second is to learn everything about your client base, their problems, hopes, dreams, etc. Look for recurring patterns in what people in your industry are complaining about and what clients request from you. In short, use freelancing as market research.
3. Turn your services into products — Once you have a solid skill set and a good understanding of the landscape, use that knowledge to find ways to turn your services into purchasable products. Outsource your work and turn yourself into an agency. Package what you provide to clients into an e-book or online course and sell that. Maybe even build a SaaS product.

This is the fastest way into digital self-employment and allows you to get the best of both worlds. Plus, working as a freelancer initially allows you to build your skills and knowledge while earning money in your chosen profession. This lets you provide more value to the people who will eventually buy your products.

As I said, if I start over, that’s what I would do. Want to learn more about this? I am available for mentorship.

Freelancer vs Entrepreneur: What Will You Choose?

In the end, both freelancing and entrepreneurship are paths to digital self-employment and earning money on your own terms. Freelancing offers a simpler, more straightforward way with immediate earning potential and lower risk. It’s ideal for those who value direct client interactions and a stable income. Entrepreneurship, while more complex and demanding, offers the potential for scalable income and greater autonomy.

But here’s the truth: you don’t have to choose one over the other. A hybrid approach lets you start as a freelancer, building skills and income, while gradually transitioning into entrepreneurship as you create scalable products or services. This way, you get the best of both worlds—stability and growth potential.

Ultimately, the best choice is the one that aligns with your strengths, lifestyle, and long-term ambitions. You do you, sparky!

Where do you see yourself on the freelancer vs entrepreneur spectrum? Which type of self-employment fits you better and why? Let’s have a chat about it in the comments—I’d love to hear about your journey!