What Is the Average Small Business Owner Salary?

small business owner salary

Small business owners love what they do. From being their own boss to having total control over their schedule, there are certainly many perks to starting a small business.

But what is it really like to be a small business owner? And what is the average small business owner salary like? 

Fundera surveyed hundreds of American business owners to find the average small business owner salary. In addition to these salary small business statistics, Fundera also asked small business owners about their hours, whether they regret starting their business, and more. 

Surprisingly, the results lean away from the most common assumptions.

While little-to-no business owners regret starting their own businesses, our results reveal they work a lot harder and earn a lot less than the national average, which might come as a surprise to you. 

Working Overtime Is the (Uncompensated) Norm

Many people assume that “being the boss” means a flexible schedule and the ability to work from home whenever you like. 

Unfortunately, it’s not entirely the case.

While business owners do have flexibility, they also have two bosses—their customers and their employees. The buck literally stops with them, so they must work exceptionally hard to keep up, and that extra hard work doesn’t always translate to a higher salary. 

small business owner salary

Most business owners work much harder than the average worker, with over 81% of respondents working nights and 45% working nights quite frequently. Even more, over 89% work weekends and 57% of those frequently work weekends.

small business owner salary

Additionally, more than 70% of the small business owners said they work more than 40 hours a week, with 19% working more than 60 hours a week, well over the national average of 38.6 hours worked per week.[1]   Not only are they working longer hours than average, they usually aren’t paying themselves overtime for that either, which contributes to the surprisingly low average small business owner salary. 

They’re More Educated, Too

Academia is often placed on an opposite playing field than entrepreneurial ambition, and that mindset can materialize in concrete ways. For instance, the Thiel Fellowship offers $100,000 to aspiring entrepreneurs to drop out of college and pursue their business ideas.

small business owner salary

While some may think people can or should start businesses and forego the traditional university route, 53.78% of respondents actually have a bachelor’s degree or higher and only 11.98% ended their formal education after high school.

That’s compared to the national average of 33% of the population that has a bachelor’s degree or higher and 41.1% of the population ending formal education after high school.[2]

small business owner salary

Does Being the Boss Make You a Big, Small Business Owner Salary?

Business owners work harder and are better educated than the average population, but are they getting paid for it? While business owners are certainly getting rewarded in many other ways, they don’t make nearly as much (or anything at all) when compared to traditional CEOs.

small business owner salary

When it comes to small business owner salary, 86.3% of small business owners said they take a yearly salary of less than $100,000. Even more surprising, a whopping 30.07% don’t even take a salary. Meanwhile, according to Payscale, the national median salary for CEOs rounds in around $158,000.[3]

Even beyond comparing small business owner salary to your typical CEO salary, the average hourly wage in the U.S., when calculated at 40 hours a week, far surpasses what most of our respondents pay themselves every year. Your average wage worker made $28.09 an hour in September 2019, and that rate at 40 hours a week ends up being $58,427 a year in earnings.[4]

These average yearly earnings are more than at least 60.7% of small business owner salaries. And, that’s not even controlling for their seniority and longer work hours.

Small business owners are paying themselves a lot less than they would likely make in most other scenarios.

No Regrets

Small business owners obviously sacrifice a lot to run their business, but do they regret it?

small business owner salary

Absolutely not. In fact, 92% of respondents said they don’t regret starting their business.

Business owners know what they’ve signed up for. It’s a lot of work with a lot of rewards. And, they’re not the only ones that benefit.

Their contributions to local communities and the larger economy are unparalleled. Small businesses created 64% of net new jobs in the U.S. between 1993 and 2011—they’re America’s job creators for a reason.[5] The personality, charm, and service they bring to our neighborhoods shouldn’t go unnoticed.

Make sure to keep in mind this information about the average small business owner salary the next time you’re visiting your favorite small business.

Methodology

Fundera and Qualtrics conducted a random survey of 409 small business owners and senior leadership at small businesses. The survey was conducted online between May 24 and May 26, 2017.

Respondents were asked 79 questions across 5 categories: demographics, credit scores and credit cards, lending, lifestyle, and economic outlook. Certain questions qualified or disqualified respondents from receiving further questions in the survey.

389 respondents self-identified as a “small business owner,” while 20 respondents identified as a “VP-level or above at a small business.” Small business was defined as a U.S.-based firm with less than 500 employees.

Related Data & Analysis

Read more helpful business-related statistics and data:

Article Sources:

  1. OECD.org. “Average annual hours actually worked per worker
  2. Census.gov. “Educational Attainment in the United States: 2015
  3. Payscale.com. “Average Chief Executive Officer (CEO) Salary
  4. BLS.gov. “Table B-3. Average hourly and weekly earnings of all employees on private nonfarm payrolls by industry sector, seasonally adjusted
  5. SBA.gov. “Frequently Asked Questions
Founding Editor and VP at Fundera at Fundera

Meredith Wood

Meredith Wood is the founding editor of the Fundera Ledger and a vice president at Fundera. 

Meredith launched the Fundera Ledger in 2014. She has specialized in financial advice for small business owners for almost a decade. Meredith is frequently sought out for her expertise in small business lending and financial management.

Read Full Author Bio