Entrepreneurship in Focus: A Side-By-Side Comparison With Freelancing and Permanent Employment

Lessons in entrepreneurship from the Chilean mine rescue 🧩 The world of entrepreneurs vs. employees 🧩 Differences in mindset 🧩 Detailed comparison, incl. freelancing as a middle ground

Photo by Jaime Spaniol on Unsplash

Life is all about choices.

And your career choices are some of the most important ones. Nowadays, you can be anything you want: an employee, a freelancer, an entrepreneur, or something in between. Each of these has its positive and negative sides.

So how do you choose?

Keep reading 👇

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🔦 The Chilean Mine Rescue: Lessons in Entrepreneurship

On August 5, 2010, a massive collapse at the San José copper and gold mine in Chile’s Atacama Desert trapped 33 miners deep underground. This accident was unlike typical mining incidents due to the extreme depth, unstable rock formations, and the mine's poor safety record. Initial estimates put the chances of finding the miners alive at less than 1%. Yet after 69 days underground, all 33 miners were successfully rescued, an extraordinary feat broadcasted globally.

The effort to save the miners unfolded in two phases: first, a search to locate the trapped men, and second, the design and execution of a rescue plan. Both phases required skills like problem-solving, improvisation, and the willingness to seek solutions beyond established norms. The leaders didn’t simply rely on existing protocols; they empowered their teams to innovate and explore untested methods, much like entrepreneurs navigating uncharted business territory.

Source: HBR

Faced with this unprecedented crisis, the rescue team had to develop and implement innovative solutions. They used three different drilling technologies, labeled Plan A, Plan B, and Plan C, to create wide boreholes for lifting the miners in specially designed rescue pods. While the drills worked on reaching the trapped miners, technicians built and refined these capsules to ensure their safety.

Targets in meters: planned vs. actual. Source: Wikipedia

Plan B's drill was the first to reach the miners after 40 days, but additional time was needed to prepare for the actual extraction. Once the operation began a few days later, all 33 miners were safely brought to the surface even faster than anticipated.

The entire rescue effort was an international collaboration that involved not only technology, but also the cooperation and resources of companies and individuals from around the world, including Latin America, South Africa, Australia, the United States, and Canada. NASA played a role too by helping with the designs of health plans and the rescue capsule. Even though many countries participated, the operation remained a Chilean-led initiative and thought process. As one NASA expert said, “The Chileans are basically writing the book.”

Ultimately, the success of the San José rescue demonstrates the power of thinking out of the box in crisis situations. By combining control with creative freedom, the team not only managed the chaos but turned it into a triumph. This approach proves that balancing decisive action with the flexibility to innovate in the face of uncertainty is key to overcoming complex challenges.

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🎭 A Tale of Two Worlds

There are two parallel worlds we live in. One is of the people who have their own businesses, and the other one is of the people who work in someone else’s business. What we want to achieve in life determines what we do. What we do determines how we think. And how we think determines how we live, incl. in which of these two worlds.

“It is not the consciousness of men that determines their existence, but their social existence that determines their consciousness.” — Karl Marx

Having our own business is like tackling the last and hardest level of this VR game called life. If we pass it, we receive a huge amount of bonus points in the form of money, and we can exchange them for whatever else in life our hearts desire.

However, establishing our own successful business is like riding a roller coaster. We are constantly up or down, super ecstatic or super depressed, having a great time or struggling to survive, from one extreme to the other. This is not for the faint-hearted.

Working in someone else’s business, on the other hand, removes both extremes and leaves everybody in the muddy middle. We don’t struggle to survive anymore, but we also don’t feel ecstatic about anything. Life is bland and gray. We start questioning our own purpose and mere existence.

These two opposing ideologies are the essence of capitalism vs. communism/socialism. Wars have been fought to determine which one is better than the other. The answer that’s been staring at us the whole time is “neither”. Like everything else, they both come with their positive and negative sides. And we don’t choose based on what we want (the positive sides), but on what we can tolerate (the negative sides).

So, why does that happen? Essentially, it’s all down to ownership. If we own something, we decide what happens with it, and then we bear the consequences - good or bad. If we don’t own it, we can’t decide what happens with it, and we don’t bear any consequences - and that removes the good together with the bad.

@krislong3755 @krislong3755 ♬ original sound - Kristopher Long RH-Truthseeker

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In other words, we’ve proven the old adage that we “can’t have our cake and eat it” - we either have it and admire it (which brings us no satisfaction, but no pain either), or we eat it (which brings us both the satisfaction of something tasty and the pain that it’s now gone). The choice is ours to make.

To make that choice, though, we have to know what we’re getting ourselves into. And we don’t know. Our governments have already made that choice for us, and our educational systems only prepare us to be employees. We’re left to our own devices if we want to run a business.

Even though that might seem unfair, it has its explanation too. Apparently, we cannot all pass the last and hardest level of the VR game called life. What game would that be if we could all do it?!

Here’s an excerpt from the book “Brave New World” by Aldous Huxley:

“An Alpha-decanted, Alpha-conditioned man would go mad if he had to do Epsilon Semi-Moron work - go mad, or start smashing things up. Alphas can be completely socialized - but only on condition that you make them do Alpha work. Only an Epsilon can be expected to make Epsilon sacrifices, for the good reason that for him they aren’t sacrifices; they’re the line of least resistance. His conditioning has laid down rails along which he’s got to run. He can’t help himself; he’s foredoomed. Even after decanting, he’s still inside a bottle - an invisible bottle of infantile and embryonic fixations. Each one of us, of course, […] goes through life inside a bottle. But if we happen to be Alphas, our bottles are, relatively speaking, enormous. We should suffer acutely if we were confined in a narrower space. You cannot pour upper-caste champagne-surrogate into lower-caste bottles. It’s obvious theoretically. But it has also been proved in actual practice. The result of the Cyprus experiment was convincing. […] The Controllers had the island of Cyprus cleared of all its existing inhabitants and re-colonized with a specially prepared batch of twenty-two thousand Alphas. All agricultural and industrial equipment was handed over to them and they were left to manage their own affairs. The result exactly fulfilled all the theoretical prediotions. The land wasn’t properly worked; there were strikes in all the factories; the laws were set at naught, orders disobeyed; all the people detailed for a spell of low-grade work were perpetually intriguing for high-grade jobs, and all the people with high-grade jobs were counter-intriguing at all costs to stay where they were. Within six years they were having a first-class civil war. When nineteen out of the twentytwo thousand had been killed, the survivors unanimously petitioned the World Controllers to resume the government of the island. Which they did. And that was the end of the only society of Alphas that the world has ever seen.”

Have we, as a human species, figured out a way of life for ourselves, a system that’s beneficial to everyone? No. Life is a mess. At least, for now. Still, that doesn’t exempt us from trying our best to leave this place better than we’ve found it.

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🃏 The Rules of the Game

Around 3 years ago, I decided to end my corporate career and become a freelancer. It didn’t take long for me to realize that freelancing is just a stepping stone, not a final destination. It’s the middle ground between employment and entrepreneurship. It takes the negatives from both, and very few of the positives.

Read my challenges in more detail here:

Here’s what that looks like in reality:

We can always stay employees or entrepreneurs. But we cannot always stay freelancers. We either move further, into entrepreneurship, and reap the full benefits of what our own business has to offer, or we grow tired of trying to establish a successful business and go back to permanent employment.

Freelancing, however, is easy to start if one has always been (meant to be) an employee and suddenly decides they want to step out of The Matrix. Especially if they still have no idea what life outside The Matrix looks like and need some time to figure this out - like I did. That’s because entrepreneurship and employment require two completely different mindsets:

• As entrepreneurs, our main goal is to do things and do them fast. We focus on executing ideas quickly, even if quality is subpar, so we can test them in practice, learn from failures, and adjust our course accordingly. Execution, rather than qualifications, drives success, and a willingness to pivot is essential. We must fall in love with the problem we’re trying to solve for our customers, not with our solution. And we need to keep trying and not give up until we make it work.

“Ask for forgiveness, not for permission.” — Grace Hopper

• As employees, our main goal is to be the best at what we do and be able to prove it. Our qualifications, experience, skills, etc. show how dispensable we are, which in turn defines how valuable we are (indispensable = invaluable). And that determines our salary, career progression, and how others treat us in general. Moreover, appearances and relationships matter more than execution. Soft skills like being pleasant to work with and navigating office politics play a crucial role. Our success comes from acknowledging the hierarchy, asking for permission, and following directives rather than being proactive or offering personal opinions - after all, we’re part of a larger system operated by others.

Read more here:

Therefore, when we know that there’s a step after freelancing, we naturally want to grow, change, improve, and make that step. But how do we decide if we should go further or go back? Let’s take a look:

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⛳️ Five Aspects of Entrepreneurship

Below is a comparison between employment, freelancing, and entrepreneurship. To make it relevant and simple, I take a one-person lifestyle business (i.e. no external investors) as an example when referring to entrepreneurship.

If you’re only interested in the employment vs. freelancing comparison, watch this video.

If you’re only interested in the freelancing vs. entrepreneurship comparison, read this article.

1️⃣ “You are your own boss.” → FALSE

Employees have bosses. It’s hard to think about it in any other way. All participants in the hierarchical structure view it as a power play - some are at the top, some are at the bottom. And the ones on top get to oppress the ones at the bottom. Therefore, employees think a lot about their bosses, and next to never about their clients or customers. For the employee, the clients/customers are the ones who pay for and/or use the end product/service that the whole company delivers - meaning, they’re too far removed.

However, even inside a company, everybody's tasks have a direct client and customer. The sponsor is the client, and the consumer/user is the customer. As employees, we’ve signed a work contract - the other party in that contract is our employer. Which means, that’s our client, i.e. the sponsor. Our client has also assigned a contact point for us - that’s our line manager, i.e. our boss. They represent our client. And our deliverables are used by someone else - could be by another team in the organization, could be by the external end user. They are our customers.

When employees become freelancers, they quickly realize that their boss is their client. This is possible because the power field has now leveled and we speak as equals - some of us offer a service, and others need that service. This may look like a subtle change of mindset, but it makes an enormous difference in how both the clients and the freelancers perceive, engage in, and carry out freelance assignments.

Entrepreneurs don’t have such a dilemma: They know very well that they have many bosses - those are all the clients/customers they serve.

2️⃣ “You have flexibility.” → FALSE

Employees admire entrepreneurs for the flexibility they have but - like everything else - that flexibility comes with a price. By default, entrepreneurs work on something that they are truly passionate about. If they weren’t, then it wouldn’t make sense for them to go through the whole ordeal of establishing a business - they might as well go back to permanent employment and save themselves all the trouble. Moreover, entrepreneurs need that passion to see them through tough times - and there’s plenty of those.

However, passion cannot be contained in a box. When we work on something we’re passionate about, work consumes us. There is no work-life balance anymore because work is life. There are no breaks before we’re done - and we’re never really done! - there are no weekends, we neglect everything else, everyone we love, and even ourselves. This is neither good, nor healthy, nor sustainable in the long run. But it’s necessary, especially in the early days, until the business is established and starts running successfully. That’s why the real problem entrepreneurs face is establishing a balance - knowing when to lean on their passion as fuel, but also when to keep it on a tight leash.

Employees, on the other hand, lack that passion - and entrepreneurs think that’s horrible! However, that gives employees the luxury of simply forgetting about work the moment they step out of the office and not thinking about it until the next time they step back in. Sure, as employees we don’t have the say on when, where, and how we work, but we get compensated for it. On the one hand, we’re compensated by not having to worry if the business fails or succeeds (i.e. having peace of mind), and on the other hand, we’re compensated by the additional incentives we receive, such as:

• division of the financial burden for taxes and mandatory insurances (health insurance, social insurance, etc.),

• legal coverage for certain events (work accidents, customer claims, etc.),

• fully paid sick leave / vacation days,

• reimbursement for work events,

• yearly or other bonuses,

• company shares,

• 13-th or 14-th salary,

• money for clothes / tools / other,

• IT equipment and SW products,

• discounts / preferential rates and coupons,

• trainings / conferences / other types of career development,

• offsite events / networking / teambuilding,

• even access to websites and other resources purchased by the company.

As entrepreneurs and freelancers we still network, of course, attend conferences and trainings, insure ourselves and our businesses, and so on, but none of this is a given - we have to plan for, organize, and sponsor it ourselves. Most importantly, for us, as entrepreneurs and freelancers, time is money - literally! Any time we don’t work we lose money - sick leaves, vacations, events, trainings, special occasions, etc. - we try to minimize these as much as possible. And coupled with the previous point (about the clients/customers being the boss), it becomes clear that we don't have that much flexibility even if we plan our daily schedules by ourselves.

3️⃣ “You don’t deal with politics.” → TRUE

As freelancers or entrepreneurs, we don’t engage in internal management processes, such as yearly goal-setting or performance reviews, we’re not fighting with others for limited promotion opportunities, we won’t take someone else’s job position. When people don’t view us as a competitor or a threat, our relationship has better chances of blossoming.

Serving clients and customers, though, does have a political element to it because we depend on them. As mentioned above, they’re our bosses, and we always want to stay on good terms with them. Still, with time we master tough situations and can more easily find a way to respect both our clients/customers and our boundaries - something which is a lot harder to do as employees.

Dealing with people essentially means there’s always the risk of politics. Having no risk of politics means having no one around us, incl. no team. And when we have no team, we struggle to find a sense of belonging. This is true for all of us because we’re social creatures by nature. Freelancing and entrepreneurship tend to be extremely lonely, so we need to find our support group if we want to remain sane, let alone achieve our goals.

For people to connect in a given setup, the same rules of the game must apply to them all. However, when we have a mixed setup - for example, a team with internal and external employees, or an event with both employees and entrepreneurs present, or a meetup of creative and corporate freelancers, etc. - we don’t have the same rules applicable to all groups. Therefore, as freelancers and entrepreneurs, we must:

1. identify what our (desired) social circle is, and

2. establish and maintain an ongoing relationship with it.

Employees do have to engage in politics but they don’t necessarily suffer from a lack of belonging. They can represent their employer anywhere to anyone, whereas freelancers only represent themselves, and entrepreneurs only represent their businesses. Most employees also strongly identify with their position in the organizational hierarchy and view it as a social status even during non-work events, whereas freelancers identify with their profession, and entrepreneurs identify with the problem they solve for their customers.

To paint the picture fully, let’s imagine a social gathering:

• Employees introduce themselves with e.g. “I’m a Product Management Director at Google and I lead a team of 200 people”, or “I’m a VP of Sales at Apple and I’m heading a department of 5000 people, including the local retail stores”.

• Freelancers introduce themselves with e.g. “I’m a painter”, or “I’m a Developer”, or “I’m a Project Manager of Transformation projects inside the Fin-Tech industry”.

• Entrepreneurs introduce themselves with e.g. “I’m on a mission to raise the financial literacy of women”, or “I coach others on buying boring businesses”, or “I help organizations become more humane”.

To me, who introduces themselves how doesn’t matter because it’s none of my business. On the contrary, I find it both funny and sad that we - as in, humanity - tend to measure the value of people based on their career achievements. Which means if someone is outside of The Matrix (i.e. permanent employment and the typical hierarchical structure), others don’t know what to make of them. This might sound silly, and yet, the culture I come from (and I know this is true of other cultures as well) is still very much doing so. Therefore, maneuvering between what family and friends think about our life choices can sometimes become overwhelming.

As employees, identifying with our (position at the) company can have its negative effects too. For example, if our contract ends for whatever reason, we might be inclined to think this signifies the end of our worth as individuals. As freelancers, however, this is the essence of the job - one contract ends and another one starts all the time. And as entrepreneurs, this is even less applicable. As freelancers and entrepreneurs, the most important thing is to keep a good name / brand / image of ourselves. The name of our current client/customer doesn’t matter that much - definitely not to the extent that it matters to a permanent employee, who has spent years of their life with one company, who identifies strongly with it, and whose circle of friends and relatives sees them as the embodiment of that specific company.

Speaking of professional and personal image, now’s the time to mention that anything we say or do affects our brand. As freelancers and entrepreneurs, this directly translates into gaining or losing money - and the effect can be immediate. The world is a small place, the Internet has made it even smaller, and the market in which we operate (i.e. our niche) narrows it down to the size of a pinhead. To visualize this, here is an explanation by George Clooney on why he’s chosen to avoid social media altogether:

4️⃣ “You have to do everything yourself.” → TRUE

While both employment and entrepreneurship can be started by people with no prior experience, freelancing is not for juniors. As freelancers, we sell our skills. Therefore, we must already have skills worth selling, and a market that has a demand for these skills. If we’re not there yet, we can use permanent employment to get the skills we need and only then start freelancing.

Assuming we already have the skills and the market for them, by becoming freelancers we essentially become a one-(wo)man show. And it’s exactly the same when we start our entrepreneurship journey. Everything needed to run our small business, in addition to servicing our clients/customers, now falls onto our shoulders. Here’s what that looks like:

Image by Janis Ozolins

As seen from this picture, on the one hand, we have to do the actual job (e.g. be a creator, in this case). And on the other hand, we have to define our strategy, implement a plan to follow it and course-correct, as needed, create our brand and constantly work on expanding our visibility and reach, constantly work on getting more clients/customers, manage our finances, manage our resources, further develop our skills, and so on. Needless to say, this calls for us to:

1. know ourselves and our strengths and weaknesses much better than the average person (incl. being able to analyze - and communicate! - any given situation as impartially as possible),

2. ruthlessly prioritize and get outsourced help where needed, and

3. be extremely disciplined with executing all of the remaining tasks that we cannot outsource/delegate.

In comparison, as employees, we’ve already outsourced the majority of these tasks to our employer completely. Even when we’re the ones initiating a task or a decision to be made (e.g. on our career development), we still need our employer’s buy-in to proceed because they’re our sponsor. Only in very few cases, our employer and we are both responsible for certain tasks within a given area - for example, our employer provides our contract and salary, but we choose our non-work-related insurances, track our personal finances (or not), and pay our taxes, and no matter how much our line manager coaches us and vouches for us, our work relationships and professional/personal image are still very much dependent on ourselves.

5️⃣ “You earn more money.” → TRUE

As employees, if things go far south, we can eventually leave the company. But because leaving one company and finding another is a very cumbersome process on both sides (employee and employer), everyone is doing their best to avoid it. This creates an environment of perceived job security - I say “perceived” because, as we see from recent events, even permanent employees can be let go by the thousands. When this happens, we realize that, without other sources of income, permanent employment is in fact extremely risky from a purely financial perspective, since it doesn’t provide us with a diversified portfolio (i.e. multiple income streams).

Freelancing and entrepreneurship don’t have this perceived job security, but the process of starting and finishing a freelance job/project, or selling products/services to multiple customers/clients is a lot less hassle, as it’s part of the job description. While going through the whole recruitment process for a permanent position can take months filled with interviews, tests, references, document reviews, and what-not, getting a freelance project usually requires only a 20-minute interview with the Hiring Manager and we receive the contract. Ending that contract also requires a notice of just a couple of weeks instead of months, as it is with permanent employment. After all, the whole freelance project/contract takes only a few months altogether. And this whole topic doesn’t even apply to entrepreneurs.

It’s fair to assume that, as freelancers, once we end a project, there are no guarantees that we’ll be able to immediately find the next one. That’s where the lack of job security hits the hardest - we must always have a financial cushion to weather such events. In order to endure, the rule of thumb is the following:

• We must have money to fall back on for at least 6 months.

• We must spend less than 30% of our income on all of our ongoing expenses (mortgage, rent, utilities, leasing, children, etc.).

• We can mentally cope with insecurity.

That said, once we become an established name in our professional domain, we’ll actually have more project requests than we can handle. Moreover, our clients will be willing to wait specifically for us to finish our current project(s) and move on to theirs, therefore, we’ll have work lined up for months, sometimes even years in advance. To achieve this, according to statistics, it takes a minimum of 2-3 years to establish our freelance brand, so all we can do during this initial time is a) work hard on our visibility, reach, and brand, but b) be patient and don’t expect overnight success.

It’s the same for entrepreneurs. Setting up a business requires a large amount of time, effort, and investment. There is a point after which things begin improving and we start getting returns on our investment, but we have to endure till then. And by “enduring” I don’t mean just sitting and waiting, but actively working to produce our product/service, establish our business and brand, and find customers/clients - all of this while not getting paid at all, but somehow finding the strength to believe in the process and its successful outcome.

“There is no gain without risk.” — Stephen King

That’s why both freelancers and entrepreneurs earn more money than employees. Firstly, this is to cover all of the expenses freelancers and entrepreneurs have, which are typically covered (some in half, some in full) by the employer when one works as an employee: taxes, insurances, sick/vacation days, etc. Secondly, this is to cover the risk of unemployment, i.e. staying without clients/customers for a few months. And thirdly, this is to cover the domain-knowledge expertise, experience, skills (for freelancers), and specific solution to a problem (for entrepreneurs). This last point is especially interesting because, as it turns out, the more someone pays for our service or product, the higher they value it. Therefore, to make our jobs easier, we must not undersell ourselves, not even at the beginning. We might be newbies as freelancers or entrepreneurs, but we’re Senior Subject-Matter Experts (SMEs) or we own unique solutions, and that’s what we’re putting a price on.

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And that’s how entrepreneurship compares to employment, with freelancing as a stepping stone between the two. And by knowing that, we can make a more educated choice about which way we want to go.

Photo by Chad Stembridge on Unsplash

Thank you for reading 💝

Till next time,

Irina

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If you need help with your specific business challenges:

1. take a self-assessment,

2. attend a webinar, or

3. contact me.