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Your current project should fund your next sales cycle

03 Jun 2014

Hi. I'm Brian Parks.

A few months ago, Seth Godin ran a class on Skillshare with the tagline "build your business right the first time". In it, he asks a very simple question: are you a freelancer/contractor or an entrepreneur?

The distinction he makes is that a freelancer is selling 40 hours a week or so of his or her own time in performing a skill, while an entrepreneur is building a business around a skill. Both can take vacations, but if a freelancer stops working, the income stream stops, while an entrepreneur's business continues to make money.

In a service-oriented business, the two can look almost identical when you're first starting out as a one-person business, but there is still a distinction that boils down to a very simple statement: Your current project is funding your job search.

Let me tell you what I mean. Actually, let me start by telling you what I don't mean: I don't mean that your current project is only funding your job search ' obviously you still have to get the work done. What I mean is that this simple strategy will help you bridge the gap between one-person company that is indistinguishable from freelancing to sustainable growth.

There are a few common methods of making a living as a freelancer. On one end of the spectrum, there is the freelancer who finds a project, gets paid for the project, and lives off the savings from that project while looking for the next. For these people, the freelancing lifestyle is very much cyclical.

A little bit further down the spectrum is the freelancer who finds a project that pays enough up front to complete the project and enough on completion to fund the next sales cycle. This is a little bit more sustainable, but it still means that there are cycles of work, sales, work, sales, and so on.

Still further is what I mean by having your current project fund your job search. This freelancer is spending some of his time each week working on projects he's already sold and the rest selling the next chunks of time he has available in his schedule. By doing this, he has a steady stream of income and he'll never be left wondering where the next job is coming from.

But what happens when projects are being sold at a faster rate than they can be completed? There are two options: one is to continue selling into the future, until you get to a point where it's better to refer prospects to other freelancers or companies that do similar work, or to scale up and hire help  at which point you cross over from freelancer to entrepreneur.

I'm curious if other freelancers and entrepreneurs in service-oriented industries have found similar trends. Let me know in the comments.