Is a freelancer an entrepreneur? Part II -Let’s talk money
In the recent post Part I: as a freelancer I am entrepreneurial, not an entrepreneur I layed out the differences between freelancing and entrepreneurship when it comes to scalability and setting up systems. Now I will discuss how being employed, being a freelancer and having a business worked for me money wise.
Ok now let’s talk about money. There’s a big difference there. Imagine three people. They’re all motivated, skilled and hard working people.
The employee starts with a decent income and will have a salary growth that is quite lineair. Maybe around 3% to 8 % increase a year. Slow steady and projectable growth. Decrease is very rare. Generally, employees can only make high income jumps by changing jobs.
The freelancer (if he/she has a valuable skill and knows how to sell it) starts higher. I see people in their twenties getting €50-€70 an hour or more, which is (even after taxes, private pension savings etc) considerably more than their employed peers. Throughout the year, they will hit highs and lows and sometimes make zero money. But a recent Dutch study shows that freelancers tend to have more savings and a better financial buffer than employees. Perhaps this might have to do with financial knowledge. In my 25–30 year old peers I see that the freelancers and entrepreneurs are generally more money-savvy than the people in a job contract. In other words, they spend less and invest more.
The entrepreneur starts with a low (or maybe zero) income. In order to bring a scalable product to the market, months of unpaid work need to be done. And maybe the entrepreneur needs to invest money in setting up the business and tools. This is, financially, the most risky role. That is why I am such a big fan of side-hustles or partial entrepreneurship.
There’s plenty of stories about ‘quitting your job’ and starting a company… But actually, there are more ways to achieve what you want that are financially less risky. Building up a product business in the weekends or freelancing a bit besides working on your startup isn’t a bad idea!
More about this? I liked reading The 10% entrepreneur and listening to the side-hustle podcast.
Disclaimer: these are examples and generalizations based on my own experience in these three roles. There are plenty of other options out there! Originally posted on my blog www.fixtrs.wordpress.com
