Who are America’s small business owners and entrepreneurs? The answers vary depending on whom you ask. Some believe entrepreneurs are fast-growth tech businesses, while others insist true small business owners can only be found on Main Street.
While we don’t have a definitive answer, the people at Lendio examined several data sources, surveyed their customers and other business owners, and came up with a lot of interesting statistics about the small business owners of America.
See if you can relate to the characteristics below:
What do small business owners call themselves?
Titles used: Self-Employed, Business Owner, Creative Professional, Consultant, Freelancer, Independent Contractor, and Sales Rep/Agent/Broker
- Millennials are far more likely to self-describe as Freelancers (11%) than are non-millennials (3%).
- More Gen Xers call themselves Business Owners (16%) than millennials (10%) or boomers (13%).
- Boomers are the most likely to self-describe as Self-Employed—47% choose this as the best description, compared with 29% of millennials and 37% of Gen Xers.
- All like being their own boss and controlling their own schedules.
Small business owner demographics
Personal characteristics
- More than 50% of small business owners in the U.S. are over 50 years old.
- 64% are male and 36% are female.
- 75+% are white, 10.3% are Hispanic, and 14.3% are a minority.
- 9% are married.
- 3% have at least some college education.
- 2% are homeowners.
- 2% live in major metro areas.
Independent workers
Gender
49% women and 51% men participate in the independent workforce.
- 75% of women believe flexibility is more important than money.
- 42% of women say they earn more money in independent work than in the regular workforce 52% of men.
- 38% of women feel more secure in independent work vs. 49% of men.
- 57% of women and 68% of men love being their own boss.
- 56% of women and 63% of men don’t like answering to a boss.
Millennials
Millennials are most likely of all demographics to want to work independently.
- 19% work in short-term fixed contract jobs, 11% through temporary agencies.
- 21% plan on building a bigger business in the next 2-3 years.
- 38% say it’s harder to find work and keep a pipeline flowing, vs. 22% for non-millennials.
- 33% feel socially isolated compared to 12.5% of boomers.
- 41% are concerned with lack of benefits, compared to 27% of non-millennials.
- 38% are worried about job
- Only 53% are “highly satisfied” with independent work, compared to 72% of non-millennials.
- 73% of millennial women enjoy the flexibility of independent work, compared to 57% of millennial men.
Gen Xers
- 49% are driven by the desire for flexibility.
- 47% think their previous employers did not recognize their value.
- 51% say they will never go back to a traditional job, but they’re the most inclined to shift from independent work to traditional work and back again.
- 50% earn more money working on their own.
- 68% like being their own boss.
- 22% started working independently following a job loss during the last recession.
Boomers
- Boomers are more satisfied and content with independent work than other demographics (76% vs. 58% for non-boomers).
- Most embraced independent work because they were tired of corporate life—being transferred, downsized, regrouped, and relabeled.
- They are looking for work that is more meaningful.
- 16% work independently to supplement retirement income.
- 73% plan to continue their independent work.
- 8% plan on building bigger businesses.
- 11% plan to retire over the next two to three years.
- Boomer men feel more in control of their lives than boomer women do (72% vs. 58%).
- Boomer women are more worried about their future (23%) than boomer men (12%).
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Business characteristics
Number of employees
- 74% have 1-9 employees.
- 21% have 10-49 employees.
- 5% have 50 or more employees.
Years in business
- 45% have been in business 11 or more years.
- 20% have been in business 6-10 years.
- 14% have been in business 3-5 years.
- 21% have been in business 0-2 years.
Revenues
- 49% have annual revenues between $100,000 and $1 million.
- 25% earn between $1 million and $10 million.
- 21% make less than $100,0000.
- 5% earn more than $10 million.
Growth
- 71% of small businesses are not growing (neither increasing revenues or adding employees); 29% are growing.
- Younger independent workers are more likely than boomers to grow into employer small businesses.
- 21% of millennial independents envision building a larger business in the near future, compared with 16% of Gen Xers.
- More than half of all small businesses with employees were started by a solopreneur.
Owners of multiple businesses
- A higher percentage of multi-business owners live in the South Atlantic region.
- The more businesses a person owns, the more likely they are to be in different SIC industries.
- There is typically an 8+ year gap between starting the first and second business. After that there’s a faster ramp up for starting subsequent businesses.
- The more businesses someone owns, the less likely they are to be home-based businesses.
- Multi-business owners are more likely than single business owners to have at least one business with 10-19 employees.
- A high-risk credit rating for the oldest business does not necessarily translate into a high-risk credit rating for a business owner’s other businesses. However, a low-risk credit rating for the oldest business does appear to carry over to the other businesses.
Money
Funding