Small Business Owners Making More Than $250,000

The average income of small business owners is around $70,000, but some business owners make a much higher salary than that. However, the small business owners who make over $250,000 annually are in the minority.

The Average Income of Small Business Owners

In the movie named after him, actor Tom Hank’s famous character Forrest Gump suggested that life is similar to a box of chocolates since “you never know what you’re going to get.” However, in our assumption, figuring out how and why small business owners earn what they do in America today is indeed much different than a box of chocolates. The economic state of American small business entrepreneurs has more in common with a tasty bowl of peanuts. Each new nugget of information is contained in a hard shell, but when it is broken open, new details emerge. These details add to the entire bowl, or picture, of a financial situation that is far from simple and very intriguing.

There is a reason that shelled peanuts are sold at Major League Baseball games, otherwise known as America’s pastime. Once you have one nut, it is hard to quit. This process is similar to learning about the average incomes of America’s small-business owners. From some of the most significant challenges entrepreneurs face to the most common small business industries, there are a lot of shells to crack open here and a lot of interesting facts to unpack.

Small Business Facts and Figures

When many entrepreneurs started their companies, they quit well-paying jobs and committed their lives to an unsteady venture with an uncertain financial future. Why would anyone want to do that, you may be asking, but the promise of business autonomy and creating a legacy sometimes are too enticing to ignore. The small business path is not an automatic victory at all, however, even in the long run. Quite the opposite, it is a path littered with uncertainty. In fact, only around 50% of the small companies started today will make it to their five-year anniversary.

Entrepreneurs cannot be generalized, of course, but determination and enthusiasm are two qualities many of them embody. What other facts have we gleaned about America’s proud and daring entrepreneurs and their companies?

They play a significant role in our current economy seeing that, according to the Small Business Association (SBA):

Close to 300,000 of our small companies are in the business of exporting.
There are close to 30 million small companies in the US, and they employ 250 people or less
60 million people are put to work by small businesses, which makes up about 50% of the US workforce.
Businesses with less than 100 employees are host to the largest share of small-business employment anywhere.
Guidant Financial provides us with a few more facts about small businesses after questioning over 3100 prospective and current small-business owners.
78% of businesses surveyed said that their company was profitable, and nearly the same amount reported that they were somewhat to very happy with the business.
Restaurants and food services, residential and commercial services, business services, retail, and construction / contracting make up the top five small business categories.
73% of our US companies are male-owned

Additionally, three leading job search sites report a similar range for the average income of owners of small companies:

Ziprecruiter: Just over $62,000 annually
Payscale: Just over $70,000 annually
Glassdoor: Just over $63,500 annually

From a different vantage point, the SmallBizGenius website reinforces these statistics. The website reveals that approximately 86% of small-business owners make less than $100,000 annually.

Ready to start your small business? Please contact our small business attorneys for a free consultation.

Are There Small Business Owners Making More Than 250,000?

Let’s return to the title and keep the peanut shells cracking open. If you are wondering which businesses are recording these high figures, you are not alone. But it is a meager slice of the small business crust that makes this much money.

However, there are some manufacturing executives or CEOs of holding companies who make more than $250,000 per year. Here are a few more small business facts, according to current studies:

Approximately 25% of entrepreneurs start their companies with no financing of any type.
Nearly 65% of entrepreneurs launch their companies with merely $10,000 in seed money.
Cash flow issues and problems are the main reason that about 82% of new businesses fail each year in the US.

Challenges Facing Entrepreneurs

A lack of funding and a lack of cash flowing through a business can doom a company before it begins. However, running a small business is not all glitz and glamour. Challenges abound for small business owners, and here are a few of the main reasons that small companies fail before they can get off of the ground:

Ineffective marketing and advertising doom 14% of new small businesses.
A lack of a business model and a business plan contributes to the failure of 17% of small companies.
Some businesses are not prepared to compete, and their competitors simply do everything more efficiently than them. 20% of businesses fail because of this.
23% of small businesses throw in the towel because of poor management.
Over 40% of small companies do not survive because their services are unoriginal or there is no demand for their products.

While it is true that you cannot expect to make close to $200,000 when you start your own small business, let us leave you with this favorable and enjoyable tidbit to munch on. Over 84% of small business owners say that they are optimistic about the future.

While starting and running a small business is a challenging endeavor, it is also one that is tackled by numerous optimistic entrepreneurs each year. This is because these talented, creative individuals see business and life, as a bowl of tasty peanuts, and they are dying to dive right in.