Small Business Revenue Statistics

15+ Average Small Business Revenue & Profit Margin Statistics in 2024

Published on: December 16, 2023
Last Updated: December 16, 2023

15+ Average Small Business Revenue & Profit Margin Statistics in 2024

Published on: December 16, 2023
Last Updated: December 16, 2023

A small business is any enterprise which has less than 500 employees and operates independently.

This means proprietorships, partnerships, and even LLCs are generally classified as small businesses. 

Approximately 99% of the businesses in the US are considered to be small businesses.  

If you’re a small business, or thinking about starting one, then you need to familiarize yourself with the following average small business revenue statistics.

Understanding these can help ensure you become one of the success stories. 

Key Statistics

  • Average revenue for a business with 5-9 employees is $1.08 million
  • Female small business owners make 40% less than male-owned businesses
  • Younger small  business owners generally make more money
  • The average small business has a profit margin between 7%-10%
  • Just 40% of small businesses make a profit
  • 82% of small businesses shut down due to cash flow problems
  • 50% of businesses fail in their first five years
  • 90% of small business owners make $94,000 a year or more
  • 55% of small businesses have more than $50k in their bank account
  • 19.9% of business are owned by ethnic minorities
  • 32% of small business owners are most concerned about inflation
  • 41% of small businesses are having trouble filling jobs
  • 64% of small businesses expect revenue to increase
  • 57% of small businesses think cybersecurity is increasingly important
  • 10.5 million small business in receipt of ppp loans have submitted forgiveness applications
  • 46.4% of US employees work for small businesses

Average Small Business Revenue Statistics in 2024

1. Average Revenue For A Business With 5-9 Employees Is $1.08 Million

Business 117

Starting a small business is stressful. There are hundreds of things to organize and you’ll need to simultaneously build brand awareness. 

It’s little wonder that many small business owners worry about whether they will make a profit or even survive. 

Fortunately, it is possible. But, you’ll need to be prepared to work very hard.

You may find the average revenues for different-sized small businesses helpful. It can make you feel inspired. 

Just remember, revenue is not the same as profit. You can have over a million in revenue and a massive list of expenses, resulting in no profit. 

Businesses which employ up to four employees have an average annual income of $347,000. 

Double the employees and you more than double the revenue. For example, 5-9 employees equate to $1.08 million in revenue. 

If you have 10-19 employees the average annual income is $2.16 million, and for businesses with 20-99 employees, the average annual revenue is $7.12 million. 

You should also note that the revenue per employee changes according to the size of the company.

The average, across all businesses, is $100,000 of revenue per employee.

However, companies with under $1 million in revenue have an average of $43,000 per employee. Large businesses, those that earn around $50 million in revenue, average $230,000 per employee. 

(Zippia)

2. Female Small Business Owners Make 40% Less Than Male-Owned Businesses

Women are just as capable as men of starting and running a successful small business.

However, despite the truth of this statement, the gender of the business owner appears to make a difference in achievable revenue. 

On average, female-owned small businesses make 40% less than male-owned businesses. 

For example, the average annual income in the first year for a male business owner is $75,000.

In contrast, a women-owned business would average $50,000.

After two years, male business owners are likely to have an annual income of $91,000.

This increases to $104,000 after three years. 

By comparison, the female-owned business had an average annual income of $59,000 after two years, and $68,000 after four years!

The survey doesn’t look into what causes such a difference in figures. 

It’s worth noting the difference in annual income also changes according to race.

The latest research shows that an Asian small business owner will make $56,808 on average, while a black small business owner makes $50,539. 

The difference isn’t as pronounced as for male/female.

(Zippia)

3. Younger Small  Business Owners Generally Make More Money

If you look at professionals in full-time employment you’ll usually find that the older generations make more money than the younger generation.

It’s effectively a reward for years of service and the knowledge they’ve accumulated during that time. 

However, the opposite is true when looking at small businesses.

This could be connected to increased energy levels or a greater willingness to take a risk. 

According to the latest research, the average small business run by someone between 35-64 will net $76,500 for its owner. 

In contrast, if the business is run by someone younger, for example, aged between 18-34, then the business can bring $81,300 to its owner. 

That’s a $5,000 difference simply because of age. 

(Zippia)

4. The Average Small Business Has A Profit Margin Between 7%-10%

Revenue is great but it’s not the same as profit. From your revenue, you’ll need to deduct all reasonable business expenses. 

What you’re left with is your operating profit, the higher it is the better your business is doing!

Most business people consider a healthy profit margin to be 10%.

Some companies produce higher rates but profits of 20% are considered to be high. In other words, the business is overcharging for its products. 

The average profit margin is 7%-10%.

The exact number will depend on what industry you’re in, how many employees you have, and whether you’re producing goods or services.

It’s a good idea to look at expected expenses, income, and profit margin before you even start trading.

The closer you monitor it the easier it will be to make adjustments and hit your target profit margin.  

Of course, the industry you’re in does affect the likelihood of you generating a good profit margin. 

Computers and peripherals are one of the best-performing industries with an 18.72% average profit margin.

Financial services does even better with an average 32.33% profit margin. 

Other industries don’t do so well. For example, the green and renewable energy industry has an average loss margin of -19.78%. Food wholesalers also struggle with a 0.69% margin. 

(Zippia)

5. Just 40% Of Small Businesses Make A Profit

Business 118

Surprisingly, despite the various figures confirming income levels for small business owners, just 40% of small businesses are deemed to be profitable at any point during their existence.

This doesn’t mean the other businesses fold quickly. A business can run at a loss for several years, provided there is enough cash flowing.

One good year of profit can help the business stay afloat in further years of loss. 

In addition, many small businesses have high levels of debt and expenses connected with starting up.

These are apportioned against income for many years, potentially causing the business to run at a loss on paper.

Approximately 30% of businesses start losing money almost as soon as they are created.

Another 30% of small businesses only ever manage to break even. 

That means it’s easier to run an unprofitable business than it is a profitable one. 

If the small business is going to be profitable it will take an average of 2-3 years for it to become so. 

(Zippia)

6. 82% Of Small Businesses Shut Down Due To Cash Flow Problems

The biggest problem for a small business is keeping enough cash flowing. 

When you start up you’ll have financial backing in one form or another.

This means you can cope with unexpected expenses, waiting for customer numbers to pick up, or even having to wait for customers to pay for purchases. 

Provided you have enough extra funds to cope with 2-3 unprofitable years the small business will have a reasonable chance of surviving. 

Unfortunately, many businesses don’t have enough funds to keep going for the third year.

As it can take 2-3 years for a business to break even or turn a profit, businesses with inadequate cash flow will fail first. 

The latest figures reveal that 82% of small businesses fail simply because they don’t have enough cash flowing through the business. 

Having to pay bills and not having enough income is a significant issue.

Other potential causes of failure due to cash flow include poor control and management of your inventory, overspending, poor credit, or not using the services of an accountant.

(Zippia)

7. 50% Of Businesses Fail In Their First Five Years

People looking to start a new business shouldn’t really look at failure rates.

Your attention should be focused on making a success of your business. 

The truth is, that 22% of small businesses will fail in their first year.

This percentage rises to 31.8% by year two and 39.7% fail in year three. 

Years four and five see similar failure rates. Year four is 49.7%, and year five is 50%.

In other words, by year five, half the startup businesses will have failed. 

The rate continues to slide, 53.6% fail by year six, 57.7M by year seven, 61% by year eight, 63.2% by year nine, and 65.7% of businesses fail by year ten. 

However, the study doesn’t show how many of these closures are enforced or done voluntarily.

Running a business is demanding, some of these people may have simply chosen to try something else./ 

(Zippia)

8. 90% Of Small Business Owners make $94,000 A Year Or More

Most people start a business to make money. Of course, it’s not always easy to do so.

But, business owners can pay themselves, provided the company has the available funds. 

In 2023, the average small business owner had an income of $50,934. That’s respectable. 

However, for 90% of small business owners, it gets better.

The study shows that 90% of small business owners earn $94,000 or more a year.

The remaining 10% earn $27,000 or less.

In other words, they’re struggling to make ends meet.

While many small businesses do go on to become a success for their owners, very few become big enough to make their owners rich.

Just 5% of small businesses will be large enough to earn over $1 million in revenue.

That means, it’s not going to happen for most small business people.

But it will happen for a select few. With the right effort and plenty of luck, you can be one of them.

(Zippia)

9. 55% Of Small Businesses Have More Than $50k In Their Bank Account

Considering the rate of failure and the difficulties facing new businesses, it’s quite surprising to find that a recent survey of small business owners revealed that 55% of them have over $55,000 in the bank. 

It’s worth noting that 96% of small businesses have a separate business account for business income and expenditure.

This makes it easier to track funds moving and ensure payments are properly allocated. 

That’s not even the most impressive part. The survey found that 23% of small businesses had over $250,000 in their account. 

Of course, the survey didn’t look at what payments these businesses had due.

In particular, those with $50,000 in the account may just be holding it ready for the next tax bill.

Approximately 14% of respondents weren’t this comfortable with funds of less than $10,000 in their account.

The remainder had between $10,000 and $25,000 in their business bank account. 

It should be noted that the Federal Deposit Insurance Corporation will only guarantee up to $250,000 per account if the bank fails.

Therefore, if you have over $250,000, make sure it’s spread across several accounts.

(nerdwallet)

10. 19.9% Of Business Are Owned By Ethnic Minorities

Business 119

According to the Census Bureau, 21.4% of small businesses are owned by women, even though they attract a low level of revenue. 

These women-led businesses employ 11 million people between them.

The same study found that 19.9% of all small businesses were owned and run by minority groups.

Of all the minority groups, the Hispanics seemed to have achieved the most growth. 

The number of small businesses owned by Hispanics grew by 8% between 2019 and 2020. 

It’s not just ethnic minorities who are seeking a new future.

The New American Economic Report highlights that 21% of US business owners are immigrants. 

In 2017, immigrant-owned small businesses employed around eight million people.

That number has since risen.

(Census Bureau)

11. 32% Of Small Business Owners Are Most Concerned About Inflation

Inflation is a direct result of demand remaining unchanged, or increasing, and the supply of products decreasing. 

At present, this is being caused in part by the Russian invasion of Ukraine.

This, and the subsequent sanctions, have reduced the availability of many components. In other words, demand is outstripping supply. 

When this happens the price of goods goes up. In short, prices are inflated. 

As a small business inflation means products and materials cost more.

These additional costs need to be either borne by the business or passed onto the consumer. 

In most cases, it’s the latter because the business can’t afford to absorb the additional costs. 

Of course, increasing prices means the business risks losing customers. In short, small businesses are caught between a rock and a hard place. 

It’s no wonder that a study by the National Federation of Independent Business Research Foundation found that 32% of small business owners are most worried about inflation. 

(National Federation of Independent Business Research Foundation (NFIB))

12. 41% Of Small Businesses Are Having Trouble Filling Jobs

There are many reasons why small businesses struggle and ultimately fail.

One of the biggest issues is cash flow. 

However, this problem is exacerbated by the problems these businesses have filling vacancies.

Without adequate staffing levels no business can offer the very best customer service, maximize productivity, and ensure the highest quality products.

Staggeringly, despite 3.9% of the US population being unemployed, 41% of small businesses are struggling to fill jobs. 

It’s worth noting that this isn’t always because people aren’t applying.

According to the NFIB, in 93% of cases it’s due to a lack of qualified candidates. 

Couple the employment issues with the fact that 85% of small businesses are dealing with supply chain issues, and you can see why small business revenue isn’t as good as it could be.

(NFIB)

13. 64% Of Small Businesses Expect Revenue To Increase

The mindset of small business owners is generally positive.

This may be why, according to a recent Bank Of America survey, 64% of small business owners expect their revenue to increase this year.

The report didn’t go into detail regarding how these businesses felt their revenue could be increased.

However, the economy is continuing to recover from the global pandemic.

In addition, inflation appears to be under control.

This is backed up by the fact that 5.5 million jobs in small businesses have been created since the pandemic officially ended. 

(Bank Of America 2022 Small Business Report)

14. 57% Of Small Businesses Think Cybersecurity Is Increasingly Important

The Bank Of America report also highlighted the issue small businesses face concerning cybersecurity. 

The report showed that 57% of small businesses are concerned about cybersecurity and believe improving their security measures is very important to their future. 

These businesses recognize that even one data breach can do a huge amount of damage to their reputation.

In some cases, that’s all it takes to finish a business for good.

As cyber criminals get better at hacking systems, it will become increasingly important to have the best possible cybersecurity systems.

That means upgrading today and updating regularly. 

This applies to all types of businesses, whether large or small.  

(Bank Of America 2022 Small Business Report)

15. 10.5 Million Small Business In Receipt Of PPP Loans Have Submitted Forgiveness Applications

Business 120

At the height of the pandemic the Trump administration created the Paycheck Protection Program.

Its aim was to ensure small businesses could continue to pay their workers. 

In theory, small businesses were taking out low-interest private loans, the equivalent of 2.5 times its monthly payroll costs.

A second drawdown for the same value could also be applied for. 

While there is controversy over how helpful this was at saving jobs. One thing is certain, the government has ended up footing the bill. 

Provided businesses meet specific conditions, they can request PPP loan forgiveness.

In effect, they don’t need to repay the loan. 

According to the latest Small Business Loan Forgiveness Report, over 10.5 million applications for forgiveness have been made.

In 93% of cases, the loan has been either partially or fully forgiven. 

(Small Business Loan Forgiveness Report)

16. 46.4% Of US Employees Work For Small Businesses

While 99% of businesses in the US are small businesses, many of these don’t have employees.

They manage everything by themselves.

Statistics show that at least 80% of small businesses have no employees.

For many, it’s the only way to ensure the business gives them a good standard of living. 

However, despite the large corporations employing thousands of people, the latest reports show that 46.4% of all US employees work for a small business. 

That’s approximately 62 million employees, all employed by 20% of small businesses. 

It’s worth noting that 16% of small businesses have between 1-19 employees.

That means, just 4% of small businesses have 20 or more employees!

In short, without small businesses, the US economy would grind to a halt.

(Forbes)

Summing Up

There is little doubt that the global pandemic took its toll on small businesses in the US and across the globe.

However, as the above average small business revenue statistics show, small businesses continue to be the backbone of America. 

These businesses have adapted, finding new ways to offer their services and ensure their survival.

It’s an impressive achievement. 

According to the latest statistics, small businesses are still recovering and growing.

In the past 25 years they have been responsible for two-thirds of all additional jobs, that’s a trend which doesn’t look like it’s about to change. 

In short, with the right attitude, now is a great time to run, or even start a small business. 

Sources

FunderaZippiaAltline.Sobanco
Nerd Wallet

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Written by Jason Wise

Hello! I’m the editor at EarthWeb, with a particular interest in business and technology topics, including social media, privacy, and cryptocurrency. As an experienced editor and researcher, I have a passion for exploring the latest trends and innovations in these fields and sharing my insights with our readers. I also enjoy testing and reviewing products, and you’ll often find my reviews and recommendations on EarthWeb. With a focus on providing informative and engaging content, I am committed to ensuring that EarthWeb remains a leading source of news and analysis in the tech industry.