When does freelancing become a start-up?

Question

In one of my previous question in this Q&A site, someone suggested me that freelancing is not for everyone. I gave a thought over it and came to a conclusion that it is correct. While it may be a choice of veterans and experts in their own fields in some countries, it is like a rescue boat option in few countries, where there is fierce competition.

I am confused on when to use the term freelancing and when to use the term start-up. I may be a freelancer with my name on my business cards, whereas, I may be a freelancer with a one-man start-up, with my firm's name on my business card.

I registered my start-up legally but still, it is a one-man show. It is a one-man company. Is it still freelancing? In that case, should I print my firm's name on business card or wait till I get a handful of hired employees?

When does the label of freelancing get removed for someone who plans for a start-up?

Answer 1

As Steve Blank says in http://steveblank.com/2010/01/25/whats-a-startup-first-principles/, a startup is an organization formed to search for a repeatable and scalable business model.

If that describes you, then you're a startup.

Typical freelancers have a stream of contracts, at generally known rates, and their businesses aren't looking to build a business model that will let them grow. Therefore they are not startups. However there are people who take contracting jobs to give them the financial freedom to build their startup. Those are startups, but surprisingly often (well, surprisingly to the people in them) they slowly morph into routine freelancing.

Answer 2

In contract work, the money you get is vaguely proportional to the time your spent working (although the multiplier should increase over time). This business model produces money instantly.
When creating a product, you don't get any money until you have produced something your can sell and even then you still need some time until it takes off (assuming it ever does). This business model needs time to start up.

This is why "start up" is rather used to emphasize the fact that a company is going through this "start up phase" (before the bend in the 'time spent' / 'money earned' graph).

Answer 3

FREELANCE: work independently and on temporary contracts rather than for a long-term employer.

CONTRACTOR: someone (a person or firm) who contracts to build things.

START-UP: The initial period of operation of a co-operative or other business or service, usually the period before the enterprise begins receiving income.

I think you are using some of these terms interchangeably. Without knowing your exact definitions (or the definitions you use to describe the terms you are using) nobody will be able to answer your question.

The term freelance and start-up are mutually exclusive. If you work for other companies as a contractor (even if it is your one man company doing the work), you are a contract company (whether you are in the start-up phase or not).

If on the other hand, you have started a new company and you are building a new product you intend to release at a future date, but you are still not collecting revenue on that product, you are a start-up.

Hope that helps.

Answer 4

A start-up is any company starting up.

Many product companies started as a service company.

So it may not try to tell you are a startup if you start freelancing this year, and start to sell a product in 4 years. Unless you create a new company for that.

Answer 5

Answering the unanswered question:

I registered my start-up legally but still, it is a one-man show. It is a one-man company. Is it still freelancing? In that case, should I print my firm's name on business card or wait till I get a handful of hired employees?

If you have registered as a business, and plan to expand sooner or later, then trade as that business now - it will be easier than changing in the future. Plus, you can title yourself as managing director, or CEO ;)

As for the question that has already been answered a few times - here's my view: you are a startup even if you are a company of one. I assume you have a business plan, you have clients, and you are making business.

Answer 6

You freelance when you do work-for-hire. Your a start-up when you sell or donate goods and/or services to customers.

Answer 7

Freelancing is freelancing and if you have employees, it's not really freelancing. A start-up (by my understanding) is when the company produces it's own product, for itself. a freelancer can create a start-up (even on their own) but they aren't a start-up themselves.