December 28, 2015
The lines are becoming increasingly blurred between freelancers and tech startups. Traditional startup figures in the US are way down. In fact, the number of startups launched in the years following 2007 failed to make up for the number of failures in the US market.
That means that net business launches were a negative number! With that sobering statistic in mind, let’s take a hard look at why freelancing has skyrocketed, and why it’s the best onramp for most of our country’s future entrepreneurs to get into the game.
Startup Capital Is Difficult to Secure
Many budding entrepreneurs come bounding out of high school and college with rosy eyed expectations that all they need is a great idea to become successful. What’s more, they think that if they have an amazing idea, they’ll be able to easily get a generous angel investor or venture captial firm to foot the bill.
Unfortunately, this turns out to be patently false. Unless you have the absolute best luck in the business of raising capital, you’re going to need things like a proof of concept and research showing market traction. Plus, if nobody else has done this great idea yet, then you’ll need to be able to convincingly answer why you’re the best person to take on the challenge of changing the world, while dodging the heavy footprint of Fortune 500 competitors who will be looking for ways to cash in on your innovations.
Personal Savings Rates Are Down in the US
The savings rates of the average US consumer is down well below a healthy level. Six-month emergency funds are as rare as fully-funded retirement plans. When a budding entrepreneur is hit in the face with the fact that startup capital is difficult to secure, personal savings become the next best thing. If, like most Americans (especially young people), he has failed to save for this eventuality, then it’s time to hit up the next person on the list.
If you don’t have money and need to secure large amounts of money quickly, who do you go to? “Friends, Family and Fools” become the next targets for the sales pitch of the century. Those with a conscience avoid asking family and friends for money, and most fools don’t have a lot of money.
Yes, it’s a moment of doom and gloom. Our poor entrepreneur might be left seeking momentary comfort binging on a TV series. But, eventually the light bulb will shine bright again…
The intrepid entrepreneur has one last hope to earn necessary startup capital: a job.
Freelance Work Combines the Freedom of a Startup with the Quick Earnings of a Job
In the gig economy, you’ll find an increasing number of budding entrepreneurs looking to earn money and build a network of contacts that can help them eventually launch their dream business. This is why many freelancers may initially smell more like a startup than an outside consultant. Alas, the reason for the blurred lines between entrepreneurs and freelancers in today’s economy is because freelancing has become a rung on the ladder to ultimate business success.
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