“Freelancers get paid for their work. If you’re a freelance copywriter, you get paid when you work. Entrepreneurs use other people’s money to build a business bigger than themselves so that they can get paid when they sleep.” … Seth Godin
Freelancing is an excellent way to fire your boss. The job economy is shifting towards skill-economy. No job can give employees financial security and financial freedom.
A freelancer’s most valuable asset is their skills. And Skills Pay the Bills.
But freelancing has limitations.
On a job, you’re exchanging your time against dollars. An employee has access to your employer’s resources. You get computers, and you get other staff to help you.
But as a freelancer, you have to invest in buying gadgets, tools, and software. You’ve to do everything yourself. You can automate some processes, but most of the time, you’ve to multitask. You also have a time limitation. Each day has only 24 hours.
You can’t grow your customer base after a certain limit. Freelancing is not scalable.
An entrepreneur can grow his business as much as he wishes.
Before laying out a roadmap to entrepreneurship, take a look at the money-mechanism of society.
What’s the difference between a freelancer and an entrepreneur?
Robert Kyosaki’s 4 Quadrant Model of Income
In any economy, there are four ways to earn money.
Robert Kyosaki, author of his bestseller book Rich Dad Poor Dad, described the ways in a 4-quadrant model.
In this quadrant, he defined the categories as:
E: Employees: Those who work for others. They sell their time for money. Blue-collar and white-collar workers fall into this category.
S: Self-employed: They work for themselves. They sell their products or services. Lawyers, doctors, digital marketing freelancers, small shop owners, and interior designers are examples of self-employed people.
B: Businesses: Others work for them. They buy other people’s time and work, and sell those at a premium. Industrialists, large scale contractors (including digital marketing agencies), and promoters of corporates are business people.
I: Investors: They don’t work for money. Money works for them. They invest money in other people’s businesses against some assured return.
Some investors provide capital to businesses under profit-sharing terms as well. Bankers, Sleeping Partners, and Venture Capitalists come under this category.
Shocking Truth – Economy Supports The Rich
That may be good or bad, but it’s beyond our control. Society encourages the rich to make more money, and rich people are either entrepreneurs or investors.
The rich get richer, and the poor get poorer is an aphorism due to the famous English poet, Percy Bysshe Shelly.
Look at the diagram below. It shows the wealth distribution of the world.
What do we see here?
- Total global wealth at the end of 2019 was US$360 trillion (tn)
- The distribution pattern looks like a pyramid.
- The top 10% of people on earth own about 80% of the total global wealth. They are mostly large business owners and investors like Jeff Bezos, Bill Gates, Warren Buffet, Mukesh Ambani, and Larry Ellison as examples.
- At the bottom, the 2.9 billion population has average wealth below $10,000 per person. They contribute to 57% of the world adult population. They are mostly blue and white-collar workers.
- The in-between segment of 1.7 billion people owns between $10,000 and $100,000 worth of wealth. They are 33% of the world’s total adult population. The self-employed professionals and small business people fall into this category.
Society supports business people because they contribute the maximum to boost the economy. Employees pay tax first before spending. Entrepreneurs spend first and pay tax on the money left. There are many more privileges that entrepreneurs enjoy as they grow. That’s a separate topic and beyond the scope of this article.
Freelancer to Entrepreneur – The 7 Point Roadmap
Entrepreneurs think and act in a different way than non-entrepreneurs. With a little bit of effort and determination, anyone can develop that mindset. Once you understand the pattern, you’ll be on the way to become a successful entrepreneur.
You can’t become an entrepreneur overnight from a freelancer. It’s a gradual process. But by focusing on the following 7 points, you can complete the journey faster.
- Have a Dream and Vision
Without a dream, you can’t have a vision; without a vision, you can’t make a plan; and without a plan, you can’t progress.
So, you must have a vision around your dream. “Dream is not what you see in sleep. Dream is something which doesn’t let you sleep” is a beautiful quote by Dr. Abdul Kalam, erstwhile President of India.
Writing your goals on paper is an excellent idea. Only 5% of us have a clearly written goal. But we can’t imagine things in the text. Images control the mind.
If I say a cheetah is running on an open field, what do you visualize? The words, or a picture? Not just an image. It’s a motion picture where a running cheetah comes alive, right?
So, I suggest my students create vision boards on the side of a written goal. Always handwrite your goals instead of typing. You’ll have a lot of mental energy when you handwrite your goals before creating a vision board.
A vision board forces you to think in specific terms. If you say “I want to own a home,” that’s not a vision. You should be able to “see” your future home with specifics. How will it look? Where will it be situated? What color? A house or an apartment? How many rooms?
A vision board would have all specifics in vivid detail, in images or video format.
A compelling vision board reminds you of your dreams about your goals.
- What do you want to have?
- Where do you want to live?
- What do you want to be?
- What do you want to do?
There’s something magical about creating a vision board and keeping that always in front of you. The images embed themselves in your subconscious and drive you to take action. That’s called “Law of Attraction.” Science is not able to explain that yet, but it’s true.
If you want to be successful in life, creating a vision board can accelerate the process.
- Have an Unshakable Positive Mental Attitude Always
An entrepreneur is like the captain of a ship. The mindset of the head of the business sets the mood of the employees and channel partners. Adversities, challenges, and failures are a part of the life of an entrepreneur. You’ve to learn to overcome those setbacks with a die-hard, “no matter what” attitude.
“When everything seems to be going against you, remember that the airplane takes off against the wind, not with it.” – Henry Ford, founder of Ford Motor Company.
When a challenge comes up, the best way is to face it. Ask yourself, “how can I overcome it to move forward.”
Being positive is a skill like any other skill and can be learned. An entrepreneur’s journey is full of long hours and erratic demands and turn-offs. Learning to manage those well, however, leads to building an insane amount of wealth.
- Become an Idea Machine – Entrepreneurs Must Have a Creative Mind
Can you think of 10 problems that your customers are having right now? Can you list them with possible solutions?
Your customer has an excellent looking website, and he is spending a lot of money on ads. But his sales are not picking up. What might be the reasons? Can you probe by asking him relevant questions? List those out.
Then find out all possible solutions. You might not have the skills to solve all the issues. But Can you outsource whatever is out of your expertise? The moment you start outsourcing solutions for your clients, you’re on your way to become an entrepreneur.
- Join or Build a Community of Freelancers Around You
Nothing empowers more than a supportive community of like-minded people.
You want to become an entrepreneur. Or you may wish to remain a freelancer. No matter what your goal is, you have to keep yourself updated and upskilled all the time.
A community of like-minded co-professionals will always help you learn new things, practice, and teach others. All successful entrepreneurs are excellent teachers.
- Develop Persuasive Communication Skills
You’ll need a lot of external support when you go from freelancer to entrepreneur. You’ve to get things done by others. So, developing a super friendly yet persuasive communication skill can make life easier. When others take care of some of your tasks, you get time freedom to scale up your business.
Reciprocation is the fastest way to gain confidence in effective persuasion. The rule is “give and take,” not the other way round. You must extend your help to others first without expecting anything in return. Give some value to your community. People help those who help others.
- Have a Financial Discipline Aligned with Your Goal
A business needs capital. During your transformation from a freelancer to an entrepreneur, you must set aside a part of your freelancing income for a planned reinvestment.
You’ll need advanced automation tools, fees for one or two virtual assistants; arbitrage (explained later) investment; subscriptions; upskill course fees, and a line of other investments and expenses.
The fastest way would be to reinvest 50 to 80% of your first year freelancing income into building an agency business. Even a commitment to a lower target is also good. But you need the discipline to stick to that consistently.
Keeping a watch on cash-flow is essential. A simple workbook on business expenses, investments, and ROI month on month can keep you on track. We shall discuss how to maintain financial accounts in a future article.
As a freelancer, you can run your operation under your own name as a proprietor. But as you grow, your liabilities and risks will increase.
A farm or a company owner/partner has limited liability, and the law protects individuals against many legal penalties.
The tax structure is more friendly to entrepreneurs and individual freelancers. Opening an LLC or Private Limited company can save you a lot of taxes in the long and short run.
The journey from being a freelancer to become a full-time entrepreneur is full of challenges. You’ll learn how to come on top in the face of setbacks and mistakes. You’ll be a different person – a leader from being a follower.
A leader creates leaders. The more leaders you’ll create, the more you’ll become free to scale up your business. Finally, you’ll learn how to run a full-grown business on autopilot.
In the process, you’ll make positive changes in many people’s lives.
I am finishing this article with one of my favorite quotes by marketing genius, Zig Ziglar.
“You can have everything in life you want, if you will just help other people get what they want.”
That should be the ultimate goal of building a business around that mindset – of making positive changes in society.
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