The Freelancer's Evolution: 8 Steps on the Path to Freedom
Issue #8 🧩 Freelance beginner's issues 🧩 The typical corporate hiring process 🧩 Kiyosaki's ESBI Model, aka Cashflow Quadrant 🧩 The Freedom's Path: a framework for non-employee career development
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Imagine you grew tired of corporate employment, you became a freelancer and you totally love it! You’re finally your own boss, you work on what you want, with whom you want, from wherever you want. It’s an absolute bliss!
But something is off. You look at all those successful business people in your professional area and you’re nowhere near them. Even worse, you have no idea how to get to where they are. They seem to be attracting money and spending their time with anything but work.
How are they doing it? There must be a way, but what is it?
Keep reading 👇
* I presented this material at the Freelance Unlocked conference in 2024 (video available).
😕 Starting to Freelance
Before I became a freelance consultant, I had spent 18 years in the corporate world. It seemed like the natural thing to do: First we study (how to be employees), then we find ourselves a job (in corporate). If we weren’t supposed to become employees, we would be taught in school how to be leaders and run our own businesses. But instead, we’re taught how to follow.
The good thing about being in corporate is that we get to keep learning - the practical skills needed to do the job, this time. And we’re surrounded by a) lots of free mentors, and b) plenty of networking opportunities. If we realize this in time, we might be able to truly capitalize on both of these (I definitely underperformed on that pt. b, so don’t be like me!).
Moreover, in corporate, we also learn what we don’t like - not only about our jobs but about work in general. Being told what to do, how to do it, when to do it, faking interest and motivation, playing politics, etc. - all of this eventually kills the fun of a job we might have enjoyed otherwise.
Freelancing sounds like Heaven in comparison: We get to be our own boss! Presumably, that means we finally get to do things the way we want them - and, of course, we know best! 🤓
Therefore, you can imagine my astonishment when, a few months down the freelance road, I realized I still had a manager, they were still telling me how to do things, I still disagreed, and so on… until all the fun was killed. This was definitely not what I had signed up for! So what was going on?
I dived deeper into the problem and saw that I was hired because of my knowledge, skills, and experience, but I was not given matching tasks. I was given entry-level tasks and I was overqualified for them. Usually, the corporate HR department ensures that employees are not overqualified for their positions. But I was not an employee. I was outside of the scope of the corporate Talent Management process. Which meant, I had to do my own Talent Management.
Hence, I set out to solve this problem - and this article is my solution.
📜 The Hiring Process
Corporate organizations have only one hiring process and it looks like this:
The organization identifies a problem.
The organization comes up with a solution to that problem.
The organization searches for internal talent to implement the solution. When they cannot find it, they decide to hire from outside.
A job description is created, which also serves as the job ad. It contains two main sections:
What the person needs to do, and
what the person needs to know to do it.
Note that section A only lists the low-level detailed tasks of the implementation. It doesn’t talk about the overall solution, nor about the problem to be solved. For example, I have seen plenty of job ads for Project and Product Managers where all the typical Project or Product Management tasks are listed, however, there’s no mention of what the project or the product actually is 🙄
Note also that section B is essentially the candidate selection criteria.
Job interviews are held with pre-selected candidates.
Note that it doesn’t matter if the organization is searching for internal or external talent - those are still job interviews, not a partner’s or a sales call.
The selected candidate gets hired.
The new hire receives the exact same job description they’ve already seen in the job ad, i.e. listing the low-level detailed tasks of the implementation, and no mention of the overall solution or problem.
The main logic of this process looks like this: The organization identifies a problem, for which they create a solution, from which they derive detailed implementation tasks.
When an organization hires Junior employees, they place them at the lowest, implementation level. As the person learns and grows in their career, they start creating solutions on their own. And, as they grow even further, they begin identifying problems that others haven’t yet seen.
When a Senior employee (read: Director, VP, CxO) decides to change their organization, they look for other Senior positions, as those will be the problem-identification ones (aka strategic, decision-making, direction-setting). Moreover, these positions are intentionally designed to collaborate with the other top decision-makers in the organization. Anything less than that will be a step back in the person’s career not only in terms of money and status, but also in terms of knowledge and skills.
When the same Senior employee decides to step out of corporate and become a freelancer, they are literally stepping out of The Matrix: The corporate career path doesn’t apply to them anymore. So, when a company is searching for a freelancer to hire, they don’t know where to place them. A Senior freelancer can operate on any of the three levels - problem, solution, or implementation - quite successfully. That’s why it’s up to the freelancer to choose.
In my case, I decided that I didn’t want to be hired for implementation tasks anymore. I wanted to be hired at the top - to identify the problems. But, if not that, then I had to be hired for the middle level at a minimum - to create the solutions.
Which brought me to the next couple of questions I had to figure out:
What is the career path of a non-employee? If I want top-level positions, I need to present myself as a top-level freelancer. What does that even look like? And how do I embody it?
Where do I find open projects for top-level freelancers? I only see implementation-level freelance positions on all job-hunting platforms. There must be another way to get to the strategic projects. What is it?
As it turned out, the answer to these questions is the same 😉
📊 ESBI Model / Cashflow Quadrant
We can say that the career path of a non-employee already exists. It’s the ESBI Model created by Robert T. Kiyosaki in 1998. Its name stands for Employee, Self-Employed, Business Owner, and Investor. It’s also referred to as the Cashflow Quadrant because it explains the different ways we earn money.
These four boxes are essentially in a straight line. However, Kiyosaki presents them in a quadrant, because he wants to make a differentiation between the first and the last two steps: On the left (first two steps), we do the job ourselves; we sell our time for money. Whereas on the right (last two steps), we don’t do the job by ourselves; we use systems or money to make money for us (and we’re free to use our time as we please). This essentially follows the logic:
For a more detailed explanation of the ESBI Model / Cashflow Quadrant, you can buy the book or check out this video:
For me, the ESBI Model was a great starting point, but it was too high-level. I needed more detailed steps to understand how to progress within one of those boxes: the Self-Employed. To do that, I had to figure out what makes us progress from one step to another in general. The answer to this question was leverage.
Let’s look at the below diagram: When we take an input, do something with it, and then create an output, this is quite straightforward. It is also the definition of a process. However, leverage changes the equation. Leverage is the impact our activity or process has. Therefore, the same input times leverage gives us the outcome of the activity/process, not only the output. The outcome is the output plus the benefit of that output - together this constitutes the total result of an activity/process.
Here’s an example:
Imagine two people reading a book for five hours. The books are different, but everything else is the same: two people, two books, five hours. And let’s also imagine that in five hours each person will have read their respective book. From this activity, we can extract the following:
Process: A person reads a book for five hours.
Process Input: A person, a book, five hours.
Process Output: The book is read.
Leverage: Book content.
Process Outcome: Depends on the book content. Let’s say that one of the books was really boring. After five hours, the person who’s read it will feel like they have wasted five hours. There’s no positive outcome, in that case. But let’s say, the other book was really interesting. And the person who’s read it now has a mind full of ideas. Based on those ideas, they may paint an amazing painting, or write a book themselves, or start a new business, or whatever else. That will be the real outcome of reading the book.
Which brought me to the next question: What are the types of leverage a freelancer has that will enable them to grow in their career / scale their business?
To answer this question, I created my own, more detailed framework (based on Kiyosaki’s), about how a freelancer evolves. I called it The Freedom’s Path.
👣 The Freedom’s Path
My model looks like this:
It maps Kiyosaki’s model 2:1 (two steps from mine map to one step of his - follow the color-coding 😉). Moreover, the focus is on expanding the concept of self-employment, so it becomes tangible and easy to go through in practice.
Note that Kiyosaki’s model can in fact expand in all four boxes. If you’re not that interested in freelancing / self-employment, you can zoom into owning a business or investing. Each of Kiyosaki’s boxes has several steps inside of it, which tell us how we evolve in that particular box/stage. However, while frameworks for growing a business or investing already exist, I didn’t find a framework for how freelancers evolve - which is why I created it.
Below are the eight steps of The Freedom’s Path explained in more detail. Leverage highlights how we grow professionally in each step. When we reach the maximum leverage for a given step, we have to move to the next step to continue growing our business (if we want to).
Step 1️⃣: (Permanent / Internal) Employee
📊 Leverage: Specific Knowledge
We start out as employees. We make money by working for other people, and we do that by selling our time for money.
What we gain, though, is specific knowledge about how to do the job. In absolute terms, knowledge is the same for everyone, but it becomes specific to us when it blends with our unique perspectives, skills, talents, experiences, approaches, etc.
When we feel we’ve learned enough to make a business out of it, we step out of the corporate world.
Step 2️⃣: External Employee / Contractor
📊 Leverage: Price
We take our specific knowledge and start offering it as a freelance service. We still make money by working for other people and selling our time, but we’re outside of the corporate system.
And, since we’re in the open market now, we get to put our own price tag on the specific knowledge we sell. However, there’s a limit to how high we can go with our pricing: If we go too high, we won’t be hired anymore. Therefore, we cannot scale infinitely based on price only. Once we reach the pricing limit, we have to find another way to grow our business.
Step 3️⃣: Independent Professional
📊 Leverage: Processes & Systems
That other way is by maximizing our productivity.
We’re still freelancing. We’re making money by owning a job and working for ourselves. And we’re still selling our time. However, since our time is money, the more we do within our working hours, the more we earn. We have to become highly efficient.
Moreover, we realize that if we don’t have our own processes, we end up following other people’s processes. Starting with how we find and apply to freelance projects, if we don’t have our own Marketing & Sales processes, we have to follow our clients’ recruiting process, as described above. Which means, we don’t have the power to choose where we land on the Problem - Solution - Implementation scale. Likewise, if we don’t have our own Project Management process, we cannot establish a mutually beneficial way of working with our clients. And so on.
Therefore, to increase our productivity and our independence, we implement processes and systems. Those could be any number of things, like having templates for emails and contracts, following defined process steps for getting new clients or delivering our projects, using IT systems for our finances and tax reports or for running our businesses as a whole, automating process steps (e.g. clients who sign our proposal automatically receive our contract for review and signature), etc.
Once we reach the limit to how much we can do within the allotted time, we realize we cannot scale time further. There are only 24 hours within the day - and we all have the same 24 hours. Hence, to grow our business further, we have to decouple ourselves from time.
Step 4️⃣: Self-Employed
📊 Leverage: Productized Services
We still make money by owning a job and working for ourselves, but we stop selling our time. We’ve now realized that real business growth happens when we can scale infinitely - and time doesn’t scale.
Therefore, we come up with a way to productize our freelance services. This means that we package our services as a product and put a price on the total deliverable, not on the time spent to produce it. That way, there’s no limit to how many of our deliverables clients can buy.
Anything that we produce once but can sell multiple times is a productized service. For example, we can create courses, guides, templates, etc., and put them out for sale.
Here’s another interesting example I saw by a freelance UX Designer: For e.g. €100, she reviews a given website and in 3 days sends a report with a) what works well, b) what doesn’t work so well, and c) how to improve it.
Let’s do some simple math: Let’s say it takes her 1 hour to produce this report. And let’s assume she works 8 hours per day. That means that if hundreds of clients come rushing through the door at the same time to buy this service, she can only serve 24 of them: (3 days multiplied by 8 hours per day) divided by 1 hour per report. So, 24 clients is her throughput. And in one year, if she’s fully booked and she works for 365 days, she can serve no more than 2,920 clients - which also caps her earnings at €292,000.
Therefore, even though this is a productized service (i.e. clients pay for the deliverable, not for the time to produce it), it cannot scale infinitely. To scale infinitely, we have to truly decouple ourselves from time. And to do that, we have to figure out the following two things:
How do we get so popular / in demand, that we’re fully booked (and we even have clients on a waiting list)?
What happens when we reach that stage of being fully booked? How do we scale ourselves?
The next two steps in my framework answer these questions.
Step 5️⃣: Solopreneur / One-Person Business (1PB) Owner
📊 Leverage: Marketing / Content Creation
To get in demand, we have to let the world know:
that we exist,
what it is we do, and
that we’re the best at what we do.
Meaning, we now run a business, and the product of this business is us. We start working as much on our business as in it. And we start marketing ourselves, instead of our services. We aim to stay constantly Top-of-Mind (ToM) so that, when our target clients realize they have the type of problems that we solve, they immediately think of us. Our names become analogous to what we do.
What do you think of when you hear the name of Robert T. Kiyosaki? Finances. How about Ryan Holiday? Stoicism. How about Madonna? Music. And J. K. Rowling? Harry Potter. And Dalai Lama? Buddhism. You get my point 😉
To achieve this level of popularity and trust, we must establish ourselves as an authority in our field. We do that by building a personal brand. And we build a personal brand with a lot of content creation, marketing, and networking. We start writing newsletters, blogs, posts, books, making videos, podcasts, interviews, presentations, webinars, conference talks, attending events, being part of communities, etc.
And when we get so popular and in demand that we even have clients on a waiting list, we’ll only have one question left to address - scaling ourselves.
Step 6️⃣: Entrepreneur / Founder
📊 Leverage: Employees
To scale ourselves, we start hiring people on a permanent basis, i.e. getting employees. And that’s the end of freelancing for us - we’re not a company of one anymore, but a company of many.
Note that previously we also hired other people for different specific tasks: e.g. tax advisors, lawyers, insurance brokers, designers, marketing and sales or business development professionals, etc. But all those people were acting as freelancers, and so were we. When we hire freelancers, we can scale up or down easily, depending on the current demand or problems to solve.
Hiring employees, however, means we’re now building a company and we need permanent help. And the more employees we have, the higher the level of complexity for us and for our business. Moreover, we have to start managing people (in addition to everything else we do).
However, the benefit is that we can get people to help us with different parts of our business which we a) don’t know how to do, b) don’t like doing, or c) don’t have the time for. Thus, we focus on the things that a) we’re good at, b) we enjoy doing, and c) add the most value to our business.
Examples:
Step 7️⃣: Shareholder
📊 Leverage: Brand / Influence
If we build our company properly, we’ll end up with a well-oiled machine that can operate without us. In other words, we’ll have a system that makes money for us.
Therefore, we no longer have to do the work ourselves. We can step out of our business (but still own it) and only work to maintain our brand and influence, because those are the main things that still attract our clients.
Examples: Any famous person (e.g. who we see constantly on TV) that has other businesses too.
Oprah Winfrey (see the footer)
Ryan Reynolds (see Experience)
Step 8️⃣: Investor
📊 Leverage: Capital / Wealth
We’ve already accumulated enough capital to invest in other businesses, financial instruments, assets, etc., and build even bigger wealth. We no longer need to work for money because our money (and other people’s money) works for us now.
Examples:
Summary
In conclusion, I’d like to clarify a few things about my framework as a whole:
What we call a “freelancer” has four distinct steps in The Freedom’s Path.
In other words, this is an evolution, where each step requires us to do something different. Hence, even though we’re all freelancers, we’re at different stages of this journey.
Additionally, about the names of the steps: I know there are many names for a “freelancer” and everyone has their preference. For me, though, it’s more important to identify what we need to do to succeed, rather than what it’s called.
Can we skip steps from The Freedom’s Path?
Yes and no. We can be an employee and decide to move straight to founder, which means skipping freelancing altogether. Or we can skip permanent employment and move straight to freelancing (or entrepreneurship). However, as already mentioned, the four steps of being a freelancer are evolutionary. Therefore, we cannot skip steps there, just like we cannot be 5 years old today and 25 years old a year later.
Can one be simultaneously in more than one step of The Freedom’s Path?
Yes. For example, we can be a freelancer and an investor at the same time, depending on how much capital we’ve already accumulated.
How can we use The Freedom’s Path?
In two ways:
For someone else: If e.g. someone is already building a personal brand, but they haven’t yet set their processes and systems, we know they might get a demand that they cannot handle. Or if e.g. they’re building their processes and systems, but they still don’t know what kind of clients they want to attract, then they’re wasting effort focusing on the wrong thing for the stage they’re at.
For ourselves: If we want to progress and we don’t know how, the framework provides the steps. It tells us what to focus on and what to ignore (at least for now). And we can also decide we don’t want to keep developing (i.e. we’re good where we are) because we now know what we need to do to grow our business further.
And that’s how we evolve professionally as non-employees. And by doing so, we not only ensure that our career and business thrive, but that we live a happier and more fulfilling life.
Thank you for reading 💝
Till next time,
Irina
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