How much does a Small Business Owner make in California? As of Jan 3, 2025, the average annual pay for a Small Business Owner in California is $126,297 a year. Just in case you need a simple salary calculator, that works out to be approximately $60.72 an hour. This is the equivalent of $2,428/week or $10,524/month.
The EBITDA Multiple Rule
The specific multiple used often ranges from 2 to 6 times EBITDA depending on the size, industry, profit margins, and growth prospects. For example, a retail store doing $100,000 in annual EBITDA could be valued roughly at $200,000 to $600,000 based on a 2X – 6X EBITDA rule of thumb.
If you focus on data analytics, yes it possible. I have a bachelors in business administration and make well above $100k now but have been in the same career for 15 years.
The good news is that $100k is more than enough to get the ball rolling in many cases. In fact, some of the most successful businesses today started with much less. But, it's important to manage your budget wisely.
So as an example, a company doing $2 million in real revenue (I'll explain below) should target a profit of 10 percent of that $2 million, owner's pay of 10 percent, taxes of 15 percent and operating expenses of 65 percent. Take a couple of seconds to study the chart.
A $100,000 salary is considered good in most parts of the country, and can cover typical expenses, pay down debt, build savings, and allow for entertainment and hobbies. According to the U.S. Census, only 15.3% of American households make more than $100,000 annually.
Finance, law, real estate, health care, and software development are among the most profitable industries in the US. If you're looking to make as much money as possible, consider starting a legal services business, a brokerage, a health care company, or a software-based venture like a virtual assistant business.
Some tax professionals recommend paying yourself 60 percent in salary and 40 percent in dividends to stay clear of IRS problems unless this means your salary would be too low compared to others in your field.
What's a good profit margin for a small business? Although profit margin varies by industry, 7 to 10% is a healthy profit margin for most small businesses. Some companies, like retail and food, can be financially stable with lower profit margin because they have naturally high overhead.
40% of businesses fail within the first three years, 49.9% within five years, 65.8% within 10 years, 73.3% within 15 years, and nearly 80% within 20 years. If you're getting ready to start your open business or you're in your first year, you're probably equal parts excited and nervous.
You might be wondering, how much does the average business owner make? According to PayScale, the average small business owner income is $70,781 per year. But, total earnings can range from $31,000 – $150,000 per year.
13% of American workers aged 15 and above made more than 100k in 2021. The annual income of over 34% of American households exceeds $100,000. In the five years to 2022, American households earning over $100,000 a year increased by 2.9%. Asian households represented the biggest cohort earning over $100k a year in 2021.
According to the 2024 survey findings, many U.S. small business owners have been growing while also facing labor challenges, which include being understaffed (52%), navigating a more competitive labor market (77%), and struggling to increase their employees' salaries to keep pace with inflation (65%).
Middle class is defined as income that is two-thirds to double the national median income, or $47,189 and $141,568. By that definition, $100,000 is considered middle class. Keep in mind that those figures are for the nation. Each state has a different range of numbers to be considered middle class.
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.
To find the fair market value, it is then necessary to divide that figure by the capitalization rate. Therefore, the income approach would reveal the following calculations. Projected sales are $500,000, and the capitalization rate is 25%, so the fair market value is $125,000.
If the cost of an offer is $1 and you sell it for $2, your markup is 100%, but your Profit Margin is only 50%. Margins can never be more than 100 percent, but markups can be 200 percent, 500 percent, or 10,000 percent, depending on the price and the total cost of the offer.
The most common six-figure jobs are in the healthcare industry. Six-figure remote jobs often involve data analysis, new technologies, and consulting services. You don't need a college degree to get a six-figure job. Among the easiest jobs with six-figure salaries are travel writers and multimedia artists.