Taking the leap from freelancer to entrepreneur

By on November 17, 2014

When individuals break away from a stable job for their own ventures, they often label themselves anything from self-employed, a business owner, a freelancer or an entrepreneur. However, according to Kobus Engelbrecht, Marketing Head of Sanlam Business Market, simply offering a service or product for a fee does not mean that an individual can be classified as an entrepreneur.

He explains that although there are various descriptions for an entrepreneur, these descriptions all outline the same message: an entrepreneur is someone that exercises initiative and sets up a business, sources funding and acquires human capital – an individual that is ultimately responsible for the business’ success or failure.

The clear distinction between a freelancer and an entrepreneur is therefore the individual’s emphasis on growth and the ability to generate wealth, not only for themselves, but for others too, says Engelbrecht.

“Freelancers, which range from writers and designers

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to advisors, are generally paid a project fee or an hourly rate for their service. Often, the business goal of a freelancer is to increase the demand for their services in order to raise their rate. The issue however with this that it is impossible to grow beyond a certain threshold by using your own labour as this is limited, it does not scale with the demand.”

An entrepreneur on the other hand develops a system that can survive with or without his/her input. “An entrepreneur will seek finance to start and build a business that is larger than himself/herself. By building such a structure, entrepreneurs are not only able to generate capital while they are not physically working, but are able to generate wealth for their employees, as well as the economy.”

Common freelancing services such as writing and editing services and graphic design or web development for example, are also highly competitive, says Engelbrecht. “While an entrepreneur will build a business, a freelance will instead live from one job to the next.”

He adds that this should not discourage individuals considering the freelancer option, as this is sometimes a crucial step towards becoming an entrepreneur. “Freelancing is a natural evolution into entrepreneurship, as freelancing is one of the simpler ways to build a new business. This stage allows one to master a skill and understand a certain market. For any start-up business, this is crucial.”

Given the wide range of tools available to start a business, less start-up capital is needed than a few years ago, and there is therefore no limit for a business in terms of growth, says Engelbrecht. “With freelancing, it is a natural development to increasingly take on more jobs and different jobs, and this is just the start of a becoming an entrepreneur – the ability to juggle many jobs. However, in order to capitalise on growth, a more formal structure is required and ultimately additional hands to manage the workload.”

He says that while entrepreneurship is rewarding, it does come with its challenges, such as being responsible for a workforce, and this may seem daunting to freelancers who are content with their current ‘steady’ job with no boss. “These concerns however shouldn’t be a hindrance from taking the next step.

“Instead of focusing on the possible challenges, freelancers should be encouraged to take the natural leap of establishing a business, as the rewards far outweigh any of the possible speed bumps. Enlisting the services of a mentor could also assist to make this next step an easier transition. As a community within South Africa, we should be continually encouraging those to view entrepreneurship as a viable career. Not only does this path reap rewards for the entrepreneur, but for those around them through job creation,” concludes Engelbrecht.

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