In 2019, the median net worth of self-employed families was $380,000—over four times larger than the $90,000 in net worth held by the typical working family (Headd 2021).
How much does a Small Business Owner make in California? As of Jan 5, 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.
A 2018 Payscale report found that small business owners median salary in the US is just above $59,000. Only 31 percent of business owners have a household income of $100,000 or more, whereas 35 percent have an income between $50,001 and $100,000.
Income can vary depending on industry, locality, profits, and time in business. The average income is $70,781 annually, but earnings can range from $31,000 - $150,000.
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.
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.
Did you know that 88% of all millionaires are business owners? “You likely won't get wealthy putting money into a savings account or buying index funds,” said Tim Denning, a personal development and entrepreneurship author.
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.
The Revenue Multiple (times revenue) Method
A venture that earns $1 million per year in revenue, for example, could have a multiple of 2 or 3 applied to it, resulting in a $2 or $3 million valuation. Another business might earn just $500,000 per year and earn a multiple of 0.5, yielding a valuation of $250,000.
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.
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.
The majority of the most lucrative professions nationwide are medical jobs, including physician, surgeon, anesthesiologist, and dentist. Some of the highest-paying non-medical jobs are chief executive officer (CEO), information systems manager, lawyer, and pilot.
Yahoo Finance
In 2024, Americans stated that the average net worth they consider “wealthy” is $2.5 million.
The typical salary range for a small business owner is between $83,178 to $126,515. By comparison, the average wage index for Americans overall is about $63,795, according to 2022 data from the National Average Wage Index.
According to the Small Business Administration, only 20 percent of small businesses fail in the first year. However, after that, the numbers take a dramatic turn for the worse. Only about half of small businesses stay alive for five years. Approximately 33 percent make it ten years.
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.
Does six figures matter? Only 21% of men earn 6 figures per year, with 8% being Black.
On average, the self-employed are wealthier than the non-self-employed. This implies the value or potential value of business ownership in economic mobility. Business equity represents a relatively large share of nonfinancial assets.
The financial industry, for instance, has created the most millionaires, according to Wealth Report. The tech industry, insurance, and healthcare are ways to grow wealth and achieve more through careers or entrepreneurship.
In his survey National Study of Millionaires, Ramsey discovered that when asked where their riches came from, a staggering 79% said they didn't receive any inheritance from parents or other family members. This goes to show: Many millionaires are made, not born. Here are several common traits many of them share.
As reported by the Corporate Finance Institute, the average net profit for small businesses is about 10 percent. Here are some examples reported by New York University—note the wide range of actual profit margins reported in the study: Banks: 31.31% to 32.61% Financial Services: 8.87% to 32.33%
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%).
While $3 million in sales is certainly impressive, it doesn't automatically translate to a specific valuation. The true worth of your business depends on a complex interplay of factors, including: Profitability: Your net profit margin (after all expenses) is a critical driver of value.