If you’re a would-be entrepreneur, you probably dream about small business ownership. Whether you’re young and just out of school or stuck in a 9 to 5 job you hate, owning your own business can seem like the best of both worlds: The Freedom to do what you love. The Freedom to work when you want. The Freedom to answer only to yourself. There’s a powerful allure there, certainly.
But how much of that allure is real?
In 2017, the business website Fundera and the data analysis firm Qualtrics asked 389 small business owners and 20 high-level executives a series of 79 questions about small business ownership. The questions touched on a variety of areas, including salary, hours worked, and overall satisfaction with their jobs.
The results might surprise you.
Here’s a rundown on what they found.
No. 1. Small Business Owners Work Long Hours
If you dream about small business ownership because you think it will give you more leisure time, think again. Small business owners work more hours than the average American worker for the most part According to Fundera, 81 percent work nights and 89 percent work weekends, and their total hours logged are higher than the national average of a little under 40 hours per week. In fact, over 30 percent of small business owners work 40 to 49 hours a week, while 20 percent work 50 to 59 hours. A small fraction work up to 80 hours in any given week.
No. 2. Small Business Owners Earn Less Than You Expect
One of the big draws of wanting to own your own business is the opportunity to make a lot of money doing what you love to do. Unfortunately, the average small business owner in the United States isn’t getting rich. In fact, a significant number of people who own their own business draw no salary at all.
According to Fundera, the average CEO’s salary in the U.S. is $163,000. But the vast majority of American small business owners make less than $100 a year — in many cases far less. About 20 percent make $20,000 to $50,000, and 15 percent make $50,000 to $75,000. Only a relatively small number make $100,000 to $150,000. And a whopping 30 percent take no salary at all.
No 3. Small Business Owners Are Well-Educated
This one shouldn’t come as a big surprise. Building a business takes talent, imagination, and a lot of know-how. But since a college degree isn’t a requirement for small business ownership (as it is for many jobs today) it’s a little surprising that small business owners are as well-educated as they are. About 30 percent have a bachelor’s degree and a little over 20 percent have an advanced degree of some kind. By comparison, 40 percent of Americans have no college education at all.
No. 4. Small Business Owners Are Happy
Despite working long hours and earning relatively little money, small business owners are a satisfied lot. According to Fundera, 92 percent of owners surveyed said that don’t regret starting their own business; only 8 percent wished they had chosen a different path. This echoes the results of a UK study by YouGov, in which 40 percent of small business owners in the retail sector said they wouldn’t choose to change careers. Given that retail has suffered mightily from the growth of online shopping, that says a lot.
The Bottom Line
Entrepreneurship certainly isn’t for everyone. It means hard work, long hours, and — for most people — a pretty small return on investment, at least at first. Yet, despite the pitfalls, it seems that small business ownership actually offers people want many of us want most: the opportunity to do what we love to do, and to do it our own way.
At The Carmoon Group, we work with women and minority business owners to help them realize their strategic goals. Our area of expertise is insurance and risk management, but our commitment to MWBEs goes far beyond that limited role. As a minority-owned business, we take our responsibility to mentor and advise others very seriously. Just let us know what we can do to help. Call us any time between 9 a.m. and 6 p.m., or reach out online and we will get back to you at a convenient time.