Freelancing - business or not? What do you think?

[Karleon]

Hello bright minds!

I was sitting in my garden under the sun and thinking - freelancing is a business or just a standard job with more flexibility? I always knew, that I will do a business, but after finishing business management degree - all the doubts and thoughts comes to my mind 'what if that' 'what if that' and it just stops me from doing anything I think of. Before studies I was more optimistic and 'believing' person, but now it's just a big load of struggling thoughts.

However, I start to think, that maybe a freelancing would be a good start, but again my 'degree' minds stops me. I start to think, that if I do something it looks so easy for me, that cannot be real. I then start, that I am not doing it 100% and etc, I stop myself from moving.

Anyone else has such problems? I guess I just need to start with anything and I will roll out on a go and maybe someone does freelancing - does it bring the same feeling as having a business?

The more I think about everything - more I get 'burnt' in my head!

 

[Victoria_V]

Think of freelancing as a stepping stone to a (potentially) successful business. Essentially freelancing is like a trial period -- if you're making enough money and building important work connections, then why not take it to the next level and make it your business venture?

 

[Mr D]

Sometimes it can be a business, sometimes merely a more flexible relationship with a company on a self employed basis.

 

[SteveHa]

Sometimes it can be a business, sometimes merely a more flexible relationship with a company on a self employed basis.

And sometimes it's not freelancing at all, but is a straight forward PAYE employment that neither the worker nor the engager have realised yet, but they will when HMRC come knocking.

 

[Mr D]

And sometimes it's not freelancing at all, but is a straight forward PAYE employment that neither the worker nor the engager have realised yet, but they will when HMRC come knocking.

Indeed that does happen.

 

[Mark T Jones]

The technical definition of a business is very broad- in fact it arguably precludes sole traders

From my own POV, a meaningful business is one which can operate when you aren’t there - potentially for an extended period. Otherwise it is effectively a job replacement

There is nothing wrong with freelancing or job replacement- I know many people who have existed very happily and comfortably in that environment. But if the goal is to build a ‘real ‘ business you need a different perspective

 

[Mr D]

The technical definition of a business is very broad- in fact it arguably precludes sole traders

From my own POV, a meaningful business is one which can operate when you aren’t there - potentially for an extended period. Otherwise it is effectively a job replacement

There is nothing wrong with freelancing or job replacement- I know many people who have existed very happily and comfortably in that environment. But if the goal is to build a ‘real ‘ business you need a different perspective

I did hear the progression put once as:

Owner-worker to manager to director.

Start off perhaps with just yourself running the business, a job replacement as you put it.
As the business grows the owner becomes more a manager of staff and dealing with problems.
As the business grows further the owner becomes a director - someone making policy and looking at the big picture while other people manage the staff.

Lots of businesses start out small and remain forever small, no intention of building to the capacity to have it run itself. Its what some owners want.

 

[Mark T Jones]

I did hear the progression put once as:

Owner-worker to manager to director.

Start off perhaps with just yourself running the business, a job replacement as you put it.
As the business grows the owner becomes more a manager of staff and dealing with problems.
As the business grows further the owner becomes a director - someone making policy and looking at the big picture while other people manage the staff.

Lots of businesses start out small and remain forever small, no intention of building to the capacity to have it run itself. Its what some owners want.

Yip it’s all about the plan.

 

[arnydnxluk]

As a freelancer you're running a micro business and have to take care of certain business related tasks such as bookkeeping, marketing yourself, communicating with your clients effectively, etc. But you're not building equity, you can't usually sell your business later on. Therefore I consider freelancing to be closer to a "job" rather than a "proper" business.

Then again, who cares what a "proper" business is defined as? You do you.

I spent my late teens and most of my 20's chasing the dream of running a business. Then when I finally started a business which was going well and seeing year on year growth, I came to a realisation (in my late 20's) that I don't want to run a business! I didn't want to take on staff, I didn't want to manage other people or be responsible for their salaries. I didn't like the non-stop nature of running the business. I didn't want to spend the next 10-20 years of my life growing a business. I wanted to continue doing what I loved doing (the core of the business) and have a decent work-life balance.

At the same time, I came to the realisation that I don't need to earn outrageous amounts of money (which was always the long term plan in starting a business if I'm honest, being young and materialistic). I thought about how much I really needed to earn for the lifestyle I wanted and realised there were diminishing returns as you begin to earn more (e.g. earning £40k vs £20k makes a big difference, but £100k vs £80k makes relatively little difference).

Does freelancing give the same feeling as running a business? For me, yes, as I'm still dealing with clients every day and still solely responsible for my success. You might however miss the 'growth' feeling of running a business, as freelancing is naturally limited to your rate and available time. Working out that I could still see compound growth by investing my earnings elsewhere (e.g. in the stock market or property) solved this issue for me.

The main thing I'd be concerned about when relying on freelancing alone is what happens if work dries up or you're unable to work. I'm lucky enough to have another one person business which provides a largely passive income, so I don't rely on freelancing to survive. If you do rely on freelancing, then you might want to consider income protection insurance, building recurring revenue streams (e.g. retainers, subscriptions) and investing a good portion of your income elsewhere.

I've gone off on a bit of tangent but my point is not to focus on running a business for the sake of running a business. Think about what you want from life and how best to achieve that. It may be that freelancing is more suited to you and that's fine.

My realisations are summed up by this post and this post but everybody is different.

 

[Deleted member 59730]

But you're not building equity, you can't usually sell your business later on.

If you are not building equity you need to look at the nature of how you do business. As a photographer I was creating equity very 1/500th second. One of my better decisions was to renew a lease and immediately sell it.

Another type of equity is your reputation. Having the ability to use your good name to finance work or investments is extremely valuable but few use it.

 

[CaveMoons]

On freelancing there is a great opportunity to build a great business. I know many people who work on freelancing. And believe me this is a great opportunity to do your favorite business.

 

[OhhEnnEmm]

The definitions don't matter at all, do what feels best for you... Nobody else will judge you based on whichever title it falls under.