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Do you consider yourself to be an entrepreneur?
Sure, you may call yourself a freelancer, designer, writer, consultant or creative professional.
But deep down inside, do you also think of yourself as an entrepreneur?
Believe it or not, your answer to that question is a fairly good predictor of your value in the marketplace. It’s also highly correlated to your overall level of joy and happiness as a solo professional.
That was one of several surprising findings in our recently published study on freelancing, the 2012 Freelance Industry Report. According to this detailed, 70-page analysis of 1,491 freelancers from around the world, 72% of freelancers consider themselves to be entrepreneurs.
Drilling down by profession, business consultants, virtual assistants and copywriters were the most likely to view themselves as entrepreneurs, followed by software developers, writers, web developers, marketing professionals and designers.
But here’s where things get really interesting. We wanted to know if having an entrepreneurial mindset impacts a freelancer’s attitudes and business performance.
It turns out that it does!
When asked if they were happier overall since they started freelancing, 92% of entrepreneurial freelancers said “Yes.” Conversely, only 86% of freelancers who did NOT consider themselves entrepreneurs felt the same way.
Furthermore, entrepreneurial freelancers tend to earn much higher hourly rates. In fact, 38% earn an average of $70 or more per hour. That’s almost twice the number (20%) of non-entrepreneurial freelancers who enjoy these higher rates (see graph below).
The Future Looks Bright
Entrepreneurial freelancers also tend to work longer hours. Nearly 32% work 40 or more hours per week, as opposed to 23% of their non-entrepreneurial peers. They also tend to be an optimistic bunch. When asked about their business prospects over the next 12 months, 82% said they’re either “extremely optimistic” or “somewhat optimistic,” compared to 65% of freelancers who do not consider themselves entrepreneurs.
At the same time, entrepreneurial freelancers seem to understand that optimism alone doesn’t generate clients. You have to consistently promote your services — which they seem to do very well.
As the graph below shows, 25% of entrepreneurially minded freelancers spend 16 or more hours per month (about 4+ hours per week) prospecting for clients. Only 13% of their non-entrepreneurial counterparts prospect for clients this aggressively, according to the study.
Freelancers Spur Economic Growth!
Perhaps not surprisingly, entrepreneurial freelancers are also much more likely to delegate or outsource tasks to others. In fact, 46% delegate or outsource some of their tasks either to employees, other self-employed professionals or other companies/firms. That’s significantly higher than non-entrepreneurial freelancers: only 27% of them delegate or outsource some of their work.
One of the criticisms of freelancing and solopreneurship — and possibly one of the reasons why policymakers tend to ignore this critical segment of the labor force in many parts of the world — is that solo businesses are not viewed as job creators. However, the fact that 46% of entrepreneurial freelancers (the biggest segment of the freelance population) outsource and/or delegate some of their tasks to others negates this assumption.
Solo professionals do indeed help spur economic activity by hiring others, even if the individuals they hire are independent workers themselves. The idea that a business can impact economic activity only by hiring traditional employees is outdated. Until government leaders understand and accept this, metrics such as unemployment and job growth will fail to gauge the true health of the labor market.
What’s the Lesson Here?
These are interesting findings. But what’s the lesson here? How can we apply this information to improve our own solo businesses and to boost our earnings?
We can start by treating what we do as a real business. It doesn’t matter if we freelance part time or full time, or if we do it for extra money or to support our family.
What really matters is the mindset we bring into what we do. And if these results speak to something, it’s the fact that adopting a more entrepreneurial mindset is directly correlated with higher earnings and greater happiness levels.
How can you adopt a more business-like approach to what you do? Start by thinking of your freelance business as having all the key areas of a traditional business. Yes, even solo businesses have several key functions that must be continually evaluated and improved. In fact, whether you are aware of it or not, there are eight different “departments” that you run when you operate a successful freelance business. Here they are:
- Sales. This, of course, is what you do to earn money. It involves reaching out to and having conversations with prospects and customers.
- Marketing. This is how you make yourself known to potential prospects who may have a need for your services, now or in the future.
- Operations. The actions you go through each day to support your craft. This includes the systems you have in place that enable you to perform your craft more easily. Scheduling your time, writing quotes for clients, managing workflow that you do yourself or perhaps outsource to assistants and subcontractors — all of these are part of the operations department.
- Human Resources. This is the department responsible for training and developing employee skills. Besides skills development, other HR issues include the decisions you make in terms of setting office hours, planning vacation time and maintaining work/life balance.
- Customer Service. This department is responsible for ensuring that you treat your clients right. How can you “go the extra mile” for customers and reap the rewards? How do you deal with clients who don’t like your work? These are all Customer Service policies.
- Production. Production is the factory floor. Think of your freelance business as a factory with a “capacity of one.” Wait, you might say, isn’t this a rather demeaning way to look at things? To take all your creative, inspired freelance work and say that it came out of a factory? Not really. Even the most beautifully crafted and artistic products in the world (think of Rolls-Royce cars, diamond rings and fine wines) leverage production efficiencies.
- Finance and Accounting. Understanding how money flows in and out of your business is critical.
- Research and Development. This department is all about embracing change in your business and using it to your advantage. Research involves looking for and finding new ways to enhance your business; development is about bringing those enhancements to life so you can profit from them.
Take a hard look at each of these key business areas. What areas do you need to research to learn more about? Where are you getting stuck? Where do you need more help?
When you break your business out into these eight functional areas and look closely at each one, suddenly you can identify those areas in need of attention.
If you notice that a department in your business is underperforming, fix it. Invest in resources that can help you in that department. And commit to spending the time needed to implement the needed changes or modifications.
Start by taking the “director” of that department out for coffee. (He or she should be very easy to reach.) And come up with a plan for how to make departmental improvements that will enhance your freelance business as a whole.
If you’d like to learn more about what your peers are earning, as well as their habits and attitudes towards self-employment, make sure to download a free copy of the 2012 Freelance Industry Report.
And while you’re at it, check out the International Freelancers Day Online Conference coming up Friday, Sept. 21. It’s fully online and completely free to attend. Thirteen all-star presenters will share new ideas and strategies for earning more, getting better clients and living more fully.
So … it’s your turn! Do you consider yourself an entrepreneur? Please share your thoughts in the comments below. I’d love to hear from you.