Life may be like a box of chocolates, but probing the financial state of American small-business owners is more like a bowl of popcorn. Each piece of information is like a kernel, seemingly insignificant on its own, but after it bursts open to reveal some new detail, it adds to your hunger for more.
Try as you might to start slow, once you hit your rhythm, it seems like you can’t process the information fast enough, certain you’ll never tire of snacking. In this case, your curiosity about the average income of small-business owners may lead you to “empty the bowl” with the most common industries for entrepreneurs, ancillary financial facts, and some of the biggest challenges entrepreneurs face.
Small Businesses Supply the Backbone
The “need to know” about salary often extends well beyond base curiosity. Who else but another entrepreneur can relate to quitting a job, as many people do, forgoing a steady paycheck and plowing every physical and emotional asset into a business? Still, if the statistics are correct, only half of all the small businesses started today will be around five years from now.
Entrepreneurs are rarely accused of being short on verve and optimism. They are a proud lot, knowing that, according to the U.S. Small Business Administration:
- They are one of nearly 30 million small businesses in the U.S. – those defined as employing 250 people or fewer.
- Nearly 300,000 of these small businesses are in the export business.
- Small businesses put nearly 60 million people to work, representing about half of the U.S. workforce.
- Companies with fewer than 100 employees boast the largest share of small-business employment.
If these kernels don’t whet your appetite, then maybe you need to shake up a bowl provided by Guidant Financial:
- U.S. small businesses still tend to be the domain of men, with 73 percent of businesses being male-owned.
- The top five small business types are business services, retail, construction/contracting, residential and commercial services, and restaurants and food services.
- Seventy-eight percent of respondents said their business was profitable. About the same percentage reported being “somewhat” or “very” happy.
Watch Those 'Kernels' Pop
It’s a fair assumption that these good feelings expressed by the more than 3,100 current and prospective small-business owners questioned by Guidant extended to salary. After using their business owner salary calculator, three leading job search sites report a similar range for the average income of small-business owners:
- ZipRecruiter: Just more than $62,000 a year
- Glassdoor: Nearly $63,500 a year
- Payscale: Just more than $70,000 a year
SmallBizGenius corroborates these salary figures from a different vantage point. It says that about 86 percent of small-business owners make less than $100,000 a year.
If you’re determined to find small-business owners making more than $250 000 a year, you need to look to manufacturing executives or those who lead holding companies, Small Business Trends advises. You have to look even harder for those making more than $1 million a year; less than 10 percent of small-business owners pocket this kind of money.
Meanwhile, SmallBizGenius rounds out the financial picture of small-business owners with other compelling facts:
- Nearly 65percent of entrepreneurs launch their business with only $10,000 in seed money.
- About 25percent of entrepreneurs launch with no financing of any type.
- Cash flow problems were the reason that 82percent of new businesses failed.
Entrepreneurs Face Myriad Challenges
While money (or the lack of it) can doom small businesses as surely as it does marriages, it's far from the only challenge that small-business owners face. Consider other reasons why small businesses fail:
- More than 40percent fail because their products or services are unoriginal or do not address customers' wants or needs.
- Twenty-three percent of small businesses fail because the wrong management team is at the helm.
- Nearly 20percent fail because they’re outmatched by their competitors.
- Seventeen percent of small businesses fail because they don't have a business model (and, presumably, a business plan).
- Fourteen percent fail because of ineffective marketing.
Even if the average small-business owner's income is less than you'd like, you can take comfort in the knowledge that 84 percent of small-business owners say they feel optimistic about the future. This makes sense because where other people might see unsurmountable challenges, entrepreneurs see a bowl of popcorn.
FAQs
How much does a Small Business Owner make in New Jersey? As of Jun 17, 2024, the average annual pay for a Small Business Owner in New Jersey is $128,460 a year. Just in case you need a simple salary calculator, that works out to be approximately $61.76 an hour. This is the equivalent of $2,470/week or $10,705/month.
What is the average annual small business income? ›
Businesses without any employees make an average of around $46,000 per year. If a company has up to 4 employees, the average revenue jumps to $387,000 per year. Businesses that employ 10-19 employees generate $2,164,000 on average per year in revenue.
What is the average profit for a small business? ›
The profit margin for small businesses depend on the size and nature of the business. But in general, a healthy profit margin for a small business tends to range anywhere between 7% to 10%. Keep in mind, though, that certain businesses may see lower margins, such as retail or food-related companies.
How rich is the average business owner? ›
Business owners have higher incomes
In fact, the Federal Reserve reported a mean income of $173,200 for families who own a business without any employees, and a mean income of $617,000 for families who own a business with five or more employees. For families who do not own a business, their mean income is $105,500.
How much money do shop owners make? ›
As of Jun 12, 2024, the average annual pay for a Retail Business Owner in the United States is $127,973 a year.
How much do small business owners really make? ›
How much does a Small Business Owner make in California? As of Jun 11, 2024, the average annual pay for a Small Business Owner in California is $113,739 a year. Just in case you need a simple salary calculator, that works out to be approximately $54.68 an hour. This is the equivalent of $2,187/week or $9,478/month.
How many business make 100k a year? ›
78% of US Nonemployer Establishments Make Less than $50,000 In Annual Revenue
| Annual Revenue | Number of Establishments | Percent of Establishments |
|---|
| > $100,000 | 3,201,418 | 11.8% |
| > $50,000 | 6,064,822 | 22.4% |
| < $50,000 | 21,039,184 | 77.7% |
| TOTAL ESTABLISHMENTS | 27,104,006 | 100.0% |
3 more rowsJan 9, 2024
According to a study by the Small Industries Development Bank of India in 2019, the average small business in India earns an annual turnover of around Rs. 4.5 million. Overview : On average, small businesses in India earn between 10 lakhs and 20 lakhs annually.
How many businesses make over $1 million? ›
9% of small businesses make over $1 million
It's likely that this number is higher today. There are 16% of owners less successful, making less than $10,000 per year. If you were to start a small business now, the most lucrative industries are technology, health, and energy.
How much can a small business make before paying taxes? ›
Income of $400 or less after deductions
Generally, self-employed individuals must pay a self-employment tax to make sure they pay their portion of FICA taxes based on their annual income. But, if your net earnings from self-employment were less than $400, you don't have to file a business tax return.
Achieving financial security as a small business requires intentional planning. At the most basic level, wealth building involves taking your sustainable business revenue and turning it into income that you invest (both back into your business and into your personal account) and save, leading to long-term wealth.
What is considered a small business's revenue? ›
It defines small business by firm revenue (ranging from $1 million to over $40 million) and by employment (from 100 to over 1,500 employees). For example, according to the SBA definition, a roofing contractor is defined as a small business if it has annual revenues of $16.5 million or less.
What percentage of business owners are successful? ›
It's one thing to start a business; it's another to make it profitable. According to NBCS, Only 40% of small businesses yield a profit. About 30% of businesses break even while the final 30% lose money.
How many small businesses fail? ›
According to the U.S. Bureau of Labor Statistics (BLS), approximately 20% of new businesses fail during the first two years of being open, 45% during the first five years, and 65% during the first 10 years. Only 25% of new businesses make it to 15 years or more.
What is the most profitable store to own? ›
Specialty food & beverage retail profit margins
As of 2021, some of the most profitable retail businesses you could own are all in the specialty food & beverage sector: Coffee bar: Non-franchised coffee bars can average $200,000–$350,000+ in startup costs, with profit margins that vary.
How much does a store owner make a month? ›
Business Owner Salary in California
| Annual Salary | Monthly Pay |
|---|
| Top Earners | $289,656 | $24,138 |
| 75th Percentile | $143,600 | $11,966 |
| Average | $137,047 | $11,420 |
| 25th Percentile | $90,800 | $7,566 |
Business income is earned income and encompasses any income realized from an entity's operations. For tax purposes, business income is treated as ordinary income. Business expenses and losses often offset business income.
What is the average turnover for a small business? ›
Small Business Turnover
Micro companies with 1-9 employees reported an average turnover of £446,872 per year, while small businesses with 10 or more employees raked in an average of £2,802,670 in 2022.
What is the average yearly growth for a small business? ›
The average company growth rate for a small business is between 7-8 percent per year. This means, as the revenue increases over a year, a small business with 10 employees would add 1 to 2 employees each year to their team.
How much should a small business pay itself? ›
If your business is established and profitable, pay yourself a regular salary equal to a percentage of your average monthly profit. Don't set your monthly salary to an amount that may stress your company's finances at any point.
