Published December 22, 2021 by WC Team

What Is The Average Salary Of A Small Businessowner?

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It takes passion, guts, and dedication to run a business – regardless of its size. Ask any business owner and they’ll tell you the same thing: if you’re looking to get rich overnight, becoming a small business owner is probably not the right career choice for you. 

Your earnings may be affected by the industry in which your small business operates, as some jobs and sectors are more lucrative than others. They will also be affected by the place you’re doing business in, since certain items and services have a higher demand in some places than others. 

If you want to establish a business, use resources to assist you in making educated assumptions about how much you will earn. But keep in mind that no two small businesses are the same.

According to one study, barely 1% of all small business owners had an adjusted gross income of more than one million dollars. So, what does a small company owner make?

Average Business Owner Salary

Small company entrepreneurs are passionate about what they do. And hence, salary is secondary to them.

There are several advantages to beginning a small business. Including being the boss and having complete control over your schedule.

But what is it like to be the owner of a small business? And what is the typical compensation for a small business owner? Surprisingly the outcomes deviate from the most prevalent expectations.

No company owners regret establishing their enterprises. Although our findings show they work far harder and earn much less than the national average.

Income varies depending on criteria such as industry, geographic area, and experience. Being the owner of a small business is no different. There is no way to forecast your income since there is no such thing as a typical small company owner's pay.

According to PayScale statistics, the average small company owner income in 2019 is $66,373. Furthermore, 83% of small company owners earn less than $100,000 per year. And 30% get no wage at all.

Because each state, and even city, has a varied cost of living so looking at a national average might be deceptive. The SBA also breaks down a company owner's typical income by state.

Their data reveals that California small incorporated company owners earned $56,142. Whereas Vermont small incorporated business owners earned $45,828.

Working Overtime Is The (Uncompensated) Norm

Many people believe that "being the boss" entails having a flexible schedule and working from home whenever you want.

Unfortunately, this is not correct. While company owners enjoy freedom, they also have two bosses. Their customers and their staff.

Because the buck stops with them, they must work extra hard to stay up. And that additional hard work does not necessarily convert into a greater income.

Most business owners work significantly harder than the ordinary worker. With over 81% working evenings and 45% working nights regularly. 

Plus 57 percent work on weekends regularly. Not only do they work longer hours than the norm but they are also not paid overtime. This contributes to the relatively low average small company owner wage.

Furthermore, more than 70% of small company owners reported working more than 40 hours per week. And 19% even reported working more than 60 hours per week. Which is actually much above the national average of 38.6 hours per week.

This is because business is like a seed you’ve sown – and you have to patiently wait for it to grow to be able to reap the benefits.

Does Being The Boss Give You A Big Paycheck?

Businessowners work harder and have a higher level of education than the general population but are they compensated appropriately? 

While business owners are rewarded in other ways they do not earn nearly as much (or anything at all) as conventional CEOs.

86.3% of small business owners claimed they make less than $100,000 per year. 

Plus 30.07% do not even get a paycheck.  Meanwhile the national median income for CEOs, according to PayScale, is roughly $158,000.

In September 2019, the typical wage worker earned $28.09 per hour. Equating to $58,427 per year while working 40 hours per week.

These average yearly earnings exceed at least 60.7% of the wages of small business owners. That doesn't even take into account their seniority or longer work hours. Small business operators pay themselves far less than they would in most other situations.

No Regrets

Small company entrepreneurs make significant sacrifices to operate their businesses but do they regret it? Certainly not. 92% of those polled stated they have no regrets about beginning their firm.

Business Owners understand what they've agreed to. It's a lot of work but it's also a lot of fun. They aren't the only ones who profit. Their contributions to local communities and the economy as a whole are unrivaled.

Between 1993 and 2011 small firms produced 64% of net new employment in the United States. They are America's job creators for a reason.

We should recognize them for the personality, charm and service they provide to our communities. Keep this information on the typical small company owner's income in mind when visiting your favorite small business.

Methodology Of Small Businesses

Fundera and Qualtrics performed a random poll of 409 small company owners and top executives and, between May 24 and May 26 2017, an online survey was conducted.

79 questions were asked of respondents that were divided into 5 categories. The categories include demographics, credit scores plus credit cards, lending, lifestyle and economic outlook. Certain questions qualified or excluded respondents from getting more survey questions.

389 respondents identified as "small business owners" with 20 identifying as "VP-level or higher at a small firm". A small business was defined as a company based in the United States with less than 500 workers.

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