Are You Building a Company, or Is Your Small Business a Job? Are you a Freelancer or an Entrepreneur?

Today’s newest tools and technology help people collaborate from anywhere on the planet. This wealth of new tech has led to an explosion of “micro-businesses.”

Doug and Polly White, management consultants who run their own micro-business called Whitestone, explained this term for Entrepreneur: “The defining characteristic of a micro-business is that the owner or principal is doing the primary work of the business, whether that means providing PR services or baking cookies. He or she may have helpers in the form of other freelancers, vendors or assistants, but the preponderance of the revenue comes directly from the work of the principle.”

An important question to ask yourself as you navigate the steep terrain of running a small business is what your endgame looks like. Are you trying to do what you do on your own terms, or are you interested in something more?

There’s no right or wrong answer to this question, but having some clarity on what it means when you say that you want to grow your business will help you make good decisions moving forward. So, let’s take a closer look at this question: Are you building a company, or is your small business a job?

The Micro-Business Revolution

The landscape of work is changing. Technologies like email, cloud storage, web apps, and more have made it easier than ever to collaborate with a team that isn’t collocated. This has many different impacts on the way that we think about getting work done and hiring people to do that work.

For one thing, it means that the number of jobs that a company will consider hiring outside help for has gone up. After all, if people are outsourcing their own careers, surely there’s flexibility for businesses to employ a vast number of people to get work done. What’s more, geographical location no longer has to be a primary concern when it comes to finding the best person to do the job.

At the same time, millennials are increasingly looking for autonomy and independence from the traditional 9-to-5 environment. Why go through the usual rigamarole of a long commute, a packed lunch, and additional hours in the office when you get work done just as efficiently from home?

For some careers, becoming an independent consultant or freelancer is an increasingly attractive option. In this context, it makes sense that micro-businesses with only one or two employee or owners should be on the rise.

The Difference Between a Micro-Business and a Small Business

If you’re deciding between running your company like a micro-business or a small business, it’s important to understand the differences between the two.

In a micro-business, you as the owner are responsible for all of the work. If you sell consulting, for example, then you are the person going over the data and making all of the recommendations. You might contract other freelancers to help with anything from data collection and analysis to marketing or invoicing, but the business is based around the work that you, as an individual, produce. If you’re selling cakes, you’re the one baking them.

With a small business, you’re still selling consulting, but it doesn’t necessarily mean that you are the only consultant you employ. Your job shifts to emphasize managing other people who do the work.

You might handle the significant clients or involve yourself at the macro level after most of the work has been done. However, there is more than one person on your team doing the job that your company sells.

Going back to our baking example, you’re making the important cakes but mainly putting the finishing touches on the cakes that other bakers you employ have made. You’re not just baking cakes—you’re running a bakery.

A small business can grow into a medium-sized company. In this kind of organization, you as the owner are doing the work of managing people who are in charge of what you’re selling. In our baking example, you’re running a chain of bakeries and not actually baking cakes. The potential rewards can be a lot more lucrative, but if what you love is baking cakes, you’re not getting to spend as much time doing what you like.

What Kind of Business Is Right for You?

Determine your business goals by asking yourself important questions about what makes you happy. Do you get energy by doing the job that you do or by making people happy with that work? Do you enjoy managing other people, and are you comfortable with delegating work?

There are plenty of people who have created the perfect job for themselves by running a micro-business where they have full autonomy to decide whether or not to work on a project and under what terms they’re willing to do that work. There are also people who have spun their work into a small business that has grown into something more. There are no right answers, only what works best for you.

Asked Another Way – Do You Want to Be A Freelancer or an Entrepreneur?

Recently, I had the opportunity to meet Seth Godin and see him answer questions from several small business and micro-business owners. His question to the audience that received the most significant response was this, “are you a freelancer, or an entrepreneur”?

Most assumed that they were entrepreneurs before an explanation of the differences.

It’s an important question.

A freelancer isn’t looking to scale their business, hire employees, and have others do the primary work. They are, for the most part, an essential element of the product or service. They work for themselves, and their clients or customers hire them knowing that it is this person who will be performing the work or delivering the service.

The objective of a freelancer is to create a sustainable job and income for themselves, where they are their own boss. As the demand for their service increases, so does their income. A freelancers ability to grow their business is finite. There are only so many hours in a day, and the workload they can manage is limited. If they need to hire others to take on some of the workload, they are then transitioning into becoming an entrepreneur.

An entrepreneur, on the other hand, has an objective of building a business that is larger than themselves and scaling it as much as they can. They are focused on creating processes, products, and systems that can be optimized and replicated by others under the name of the business or brand, and there is not an expectation from customers that they will be the one actually performing the actual work.

An entrepreneur looks to have others do the work and is focused on increasing profits through growth and scale. The more business, clients, customers and locations, the better. That’s what an entrepreneur focuses on – building a scalable, profitable business.

And this is where many business owners get into trouble. They haven’t defined if they are a freelancer or entrepreneur. Whether they want to operate a micro-business or a small business. Unfortunately, you can’t be, or do both, successfully. One scales, one doesn’t. You need to decide which works best for you.

As a freelancer, you can’t manage a team of employees, and the growth of your business when your clients or customers have expectations that they are purchasing your talent or expertise as part of the service. As an entrepreneur, investors will be reluctant to invest in a business where YOU are the product or service. YOU are not scalable.

So, the solution is simple.

If you’re a freelancer and you simply want to be your own boss, be a freelancer and embrace it. Don’t worry about turning down one job in favor of another, Don’t let occasional and inevitable gaps in business concern you. Focus on the quality of work you produce, and you’re reputation. Your income and business will grow based on demand. Stand out, increase your connections and deliver the best product, and personalized customer service YOU can.

If your an entrepreneur, be an entrepreneur. Focus on building a business that can be successful with, or without you. Don’t be an employee of your company and get caught up in the day to day work. Manage your business as an entrepreneur, hiring and training the best people to provide products and services to an ever-growing customer base. Create processes and practices that can be replicated and scaled.

In either case, make a choice, and then go for it

What You Can Do Right Now

The digital revolution has made many different work relationships and situations possible, and micro-businesses and contractors are subsequently on the rise. When you’re starting out on your own, it’s important to think about what your ideal growth scenario looks like.

Take the time to ask yourself: Are you building a company that is trying to grow into something more, or are you using your small business to create your own ideal job? Both have their benefits and their drawbacks, but knowing what you want is the key to getting what you want and realizing your dreams.

  • Remote work is on the rise, and employers and employees have more options than ever before for who to hire and how to get hired.
  • Micro-businesses with only one or two owners are focused on creating the ideal job for those owners.
  • Small businesses place more of an emphasis on managing and delegating, which is right for some people but not for others.
  • Do you want to be an entrepreneur or a freelancer? Remember, there is no wrong answer, it’s personal preference as to the type of business you want to operate and the goals of your business.
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