Average Small Business Revenue and Owner Income

Average small business revenue and owner income vary by industry, location, business size, and profits. Compare typical owner salaries, revenue figures, and key factors affecting earnings to estimate potential income for your business.

By Douglas Wade, Attorney

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Table of Contents

Introduction

Important Lessons Learned

The Specifics of Average Annual Revenue

Size Is Important for Small Business Income

Yearly income of a small business owner

Factor #1 for SBO income potential: Industry

Factor #2 for SBO income potential: Locality

Factor #3 for SBO income potential: Profits

Utilize resources to calculate the income

Introduction

Being a small business owner takes courage and enthusiasm. It’s not easy to get a small business up and running to generate profits fast. According to a survey, 47.7% of SBOs (small business owners) have had to miss or postpone their payments at a certain point. What is the income of small business owners, then?

Important Lessons Learned

Income for small business owners varies greatly depending on a number of factors, including industry, location, and expertise; there is no standard compensation.
The average annual income of a small business owner is approximately $77,823, with total profits ranging from approximately $35k to $178k.
Pay is heavily influenced by industry. For instance, software developers typically make $144,570. Flower designers make roughly $37,700.
Location is important. The cost of living in each state and city affects earning potential. Managerial average wages vary by state.
Profits and the form of payment determine personal income. Owners can take a salary or draw. They typically cap remuneration at 50% of profits.

The Specifics of Average Annual Revenue

After looking at some recent data on average small business revenue, let’s make sure we know what average small business revenue implies and why it is an important metric for small businesses worldwide.

A small business’s average annual revenue is a fairly straightforward concept: it refers to the overall sum of money that a business makes. This specifically refers to the amount of money earned prior to paying taxes and costs. You may have encountered the term “top line,” which describes the company’s revenue at the top of its statement of income before expenses are deducted. The “top” line is then modified to form the “bottom line.”

The average sum of money a small business makes overall is known as its typical annual revenue. The U.S. Census defines revenues as “receipts,” which include sales, commissions, gross receipts, & income from trades and companies that are reported on a business’s yearly tax returns.

Size Is Important for Small Business Income

You may have assumed that every owner of a small business becomes wealthy very rapidly, but the data show that this is untrue. It makes sense that you pay close attention to the statistics and understand the kind of struggle you will face if you want to launch your own small business. Generally speaking, your anticipated average small business revenue will begin as a small amount before taxes and additional business-related costs are deducted.

Now, a tiny business may be more feasible and hence more successful when it may be characterized as somewhat “bigger.” Business owners with employees generate more revenue than those without, and larger “small” enterprises with employees typically earn more money. It is not unexpected that businesses with employees generate more revenue compared to those without, which in turn leads to the hiring of more staff, and so on.

Yearly income of a small business owner

Industry, geography, & experience are some of the variables that affect incomes. Owning a small company is no different. Since there is no standardized wage for small business owners, it is impossible to predict how much you earn as an individual.

You might be curious about a small business owner’s average compensation. The annual salary (average) of a small business owner is $77,823 (PayScale data). Annual total earnings can vary between $35k & $178k.

Because the cost of living varies by state and even location, looking at a national average might be deceptive. Your earnings as a small business owner are not clear-cut. Examine the elements that influence your earnings.

Factor #1 for SBO income potential: Industry

The industry that your small company operates in may have an impact on your earnings. Certain sectors and professions pay higher than others. Look at other small business owners within your field to get an idea of their earnings. Don’t expect your earnings to be the same as those of business owners in other industries.

For instance, the average yearly salary for software developers (mathematical and computer jobs) is $144,570, whereas the average annual salary for floral designers is $37,700. Go to the Bureau of Labor Statistics website for additional wage data by occupation and industry.

Factor #2 for SBO income potential: Locality

Once more, the location of the business can affect your earnings. The cost of living is higher in some places than in others. Additionally, some regions have higher demand than others for particular goods and services.

Wage data is broken down by industry, state, and occupation in the BLS’s State Occupational Employment & Wage Estimates guide.

For instance, the average yearly salary for jobs in management is $182,530 in NY and $118,670 in Alabama.

You may compare salaries for various jobs using the BLS database. You may earn more in some places than others because prices are correlated with city size.

Factor #3 for SBO income potential: Profits

Depending on whether or not you get a salary from your company or an owner’s draw, your average small business revenue may fluctuate. A salary is a set sum you pay yourself on an ongoing basis, but a draw is a percentage of your company’s revenues.

Your income is based on the profits you make unless you are paid a wage. You may receive a lower salary when your company’s profits are low than when they are high. It’s possible that your business won’t turn a profit till at least the first year. In this situation, you may choose to merely take home the amount of money required to pay your bills.

Instead of giving yourself a hefty check, think about how it will impact the health of your company. Instead of using the money as revenue, you may decide to reinvest it in your company.

The majority of small business owners restrict their compensation to fifty percent of their profits, according to the SBA. In other words, if your company makes $100,000, you shouldn’t make more than $50,000. Some business owners believe that their personal income increases with their company’s profits.

Utilize resources to calculate the income

What is the income of a small business entrepreneur? There is no one right answer. Use resources to assist you in estimating your earnings if you are considering launching a business. But keep in mind that no two companies are the same.

The degree of marketing you do, the quality of your customer service, and other things may affect your earnings.

An accountant can review your financial data if you are a seasoned small business owner attempting to determine whether or not you should be making more or less money. They can assist you in creating a cost budget.

Have a quick question? We answered nearly 2000 FAQs.

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