The difference between a startup, a SME and a freelancer
It’s not a bad thing to know what sort of business you’re running and how your money making activities can be defined. Knowing this will help guide all sorts of things in your business. How you do and don’t go about getting funding. How you do and don’t register a legal entity to trade under. How you define what success looks like along the way.
What’s a freelancer?
A freelancer is a person who is self-employed... they typically work on a job-by-job basis, offering a service. Often their fee structures will be an hourly or day rate. Sometimes they’ll bill on a project basis. A freelancer works IN their business, in the sense that without them actually working, the business does not generate any revenue. You can’t take a freelancer OUT of their business. People get excited about freelancing because it means they’ve got a bit more control about the type of work they do, who they work with, when they work and what they charge. Of course, the flip side of that is less stability in terms of income.
Words like ‘scale up’ aren’t really applicable to a freelance business because a freelancer’s revenue is limited by the amount of hours in their day. A freelancer’s time is a freelancer’s money. That’s not to say that freelancing can’t be highly lucrative. It’s just about offering the right service to the right customer segment at the right price.
commercial Success to a freelancer:
enough client projects to fill enough working hours per month
What is a startup? a baby version of a sme?
The thing that typically defines a startup is the end goal. We’ve all heard the startup buzz words… venture capital, disruption, innovation, tech, scale, acquisition. Although someone with a startup idea can end up being a SME (small to medium enterprise) or even a big business, the aspiration of a startup is normally to build big, take over a market, disrupt an industry and get bought. Startup business models typically value the ability to scale using technology.
commercial Success to a startup:
selling the startup in as short a time as possible after making massive market impact
What is a SME?
In a nutshell, a SME is a small to medium sized enterprise. Unlike it’s more agile, disruptive cousin, the startup, a SME is usually focused more on slow, steady growth within a proven market. A SME is usually underpinned by the goal of sustainability and typically use tried and tested business models.
commercial Success to a sme:
sustainable, reliable revenue