Why Being Self Employed Doesn’t Make You An Entreprenuer

Self Employed Or An EntrepreneurIt’s time for a quick reality check for many so called “entrepreneurs” out there today. News flash! You aren’t an entrepreneur just because you’re self employed. Sorry… wait, no I’m not!

It’s time to learn a bit about what differentiates self employed people from entrepreneurs and figure out which you really are.

What Is Self Employment

According to Wikipedia, self employment is…

the act of generating one’s income directly from customers, clients or other organizations as opposed to being an employee of a business (or person).

The best way I can describe self employment is self employed people perform the same tasks that people with a similar job may do, but they do it independently and are not directly employed by their clients. Some examples of self employed careers are freelance writing, freelance photography and contracting.

Self employed people may work with one client or many clients and may work more or less than a similar person employed to do the same job. They may be paid by the project, paid by the hour or some other arrangement, but they do not receive a paycheck.

Someone who is self employed may have to invoice their clients, but they do not run a business per se. They do not employ anyone to work for them as a formal employee. They don’t create a widget to sell. They simply complete work for others, whether that work is a written article or a painting. Self employed people sell their labor.

What Is An Entrepreneur

According to Google, an entrepreneur is…

a person who organizes and operates a business or businesses, taking on greater than normal financial risks in order to do so.

In my mind, an entrepreneur runs a business. The business may not employ anyone directly, but work is not always completed by the business owner. The business owner may hire others or contract out work to be completed for them. They must invest in their business in order for it to grow, which may require a significant amount of capital.

Entrepreneurs want to growing something bigger than them. They don’t want to simply sell labor. Instead, they want to grow their business to a point where it can make money beyond what they could do as a single individual.

Why Are Self Employment and Entrepreneurship Different?

The definitions above should make it obvious why self employment and entrepreneurship are different. If you don’t get it yet, it’s time to dig a bit deeper.

Self employed people and entrepreneurs both want to make money, but they’re very different in how they make money. Self employed people are limited to what they can produce themselves to make money while entrepreneurs are not. Entrepreneurs outsource and hire others in order to grow their business while self employed people are their only resource for getting work done.

Self employed people are restricted by their small client base, while entrepreneurs can grow their businesses to the point where they don’t have to rely on a few core customers. Entrepreneurs are often looking to grow their businesses to a bigger level while self employed people must stop when they reach their personal capacity for work.

Which Do You Want To Be?

Do you want to be self employed or do you want to be an entrepreneur? Do you want to grow a business and expand beyond yourself, or just simply complete what only you can work on? No matter what your answer is there is one question more important than what you want to be.

Which Are You Actually?

Are you actually self employed or are you an entrepreneur? If you aren’t an entrepreneur but you wish to be, there isn’t anything stopping you from escaping self employment and joining the ranks of the entrepreneurs. Figure out how you can expand beyond yourself and grow into a true business.

There Is No Right Answer

Whether you’re currently happy to be self employed, happily an entrepreneur, someone who is self-employed and wants to be an entrepreneur or an entrepreneur that wishes they were self employed, there is no right answer to what you should be.

Some people are perfectly happy being self employed while others can only be happy as an entrepreneur. It doesn’t matter which you are as long as it makes you happy and you can financially support yourself.

Just do yourself a favor and know which you really are and don’t confuse the two. Entrepreneurship and self employed are two very different things.

Time to share in the comments below! Do you think it’s better to be an entrepreneur or better to be self employed? I’d love to hear your thoughts!

Photo by: PT Money Text added by: Lance Cothern

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About Lance Cothern

Lance Cothern, a Certified Public Accountant (CPA) licensed in the Commonwealth of Virginia, is the founder of Money Manifesto. You can read more about him here or connect with him on Facebook, Twitter, Google+ or Pinterest.

Comments

  1. I’m currently self-employed but growing towards entrepreneurship. While now, I’m largely paid for the work I do for others, I’m looking to grow exponentially and develop systems where I can hire people to do a lot of this work for me.

  2. I agree to a point, and I have respect for both!

    I’m looking to develop more products and things. I’ve got a crazy idea that I want to kickstart or do something about it this winter. Stay tuned!

    Sam

  3. I couldn’t agree more! The majority of what I do (freelance writing and virtual assistant work) is just like a job only I have multiple “bosses” to deal with instead of just one. However I do believe that you have to have some entrepreneurial skills to be able to build up a client list and go the self employment route. What I really want, and am working towards, is having a business that I can run rather than a job that runs me.

    Don’t get me wrong self employment is great but I completely see where you’re coming from. I want to one day be in the position where I can work on a business rather than in it!

    • I’m not even self employed, so in the entrepreneur path you’re well ahead of me! Good luck making it to where you want to be. I have no doubt you’ll be able to do it.

  4. Lance,

    The definition you pulled on entrepreneurship:

    “a person who organizes and operates a business or businesses, taking on greater than normal financial risks in order to do so.”

    …applies 100% to self employment. Self employed people operate a business. They also take on greater than normal financial risks to do so.

    I happen to disagree with your stance here. I haven’t read in any dictionary that a business needs employees in order to be a real business.

    Having a one person service business is still a business, and the owner is still an entrepreneur.

    A couple definitions I’ve found of entrepreneur from dictionary.com:

    – The owner or manager of a business enterprise who, by risk and initiative, attempts to make profits.
    – One who starts a business or other venture that promises economic gain but that also entails risks.

    Both apply to one person service business owners.

    No hard feelings here, but as a one person business owner, I don’t think it’s fair for someone to tell me I’m not an entrepreneur.

    • I think people can be entrepreneurs with one person businesses and just because a self employed person is not currently an entrepreneur doesn’t mean they’ll never be an entrepreneur. I do think there is a difference though and they aren’t the same thing. That said can some one person shops be entrepreneurs? Definitely. However, not all one person businesses are entrepreneurs, some are self-employed. Thanks for sharing your thoughts Kraig!

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