How Much Do Entrepreneurs Make? The Reality Behind the Dream
Ask people what entrepreneurs earn and you’ll hear about billion-dollar exits and unicorn founders. Ask the data and you
Ask people what entrepreneurs earn and you’ll hear about billion-dollar exits and unicorn founders. Ask the data and you get a different answer: 65,500 dollars per year. That’s the median income for small business owners, sitting below the average American salary and barely scraping the national median.
There are 665 million entrepreneurs worldwide. India has 104 million, China has 64 million, the United States has 33.2 million. Most of them work longer hours than employees, earn less money, and deal with income swings that would terrify anyone with a mortgage. The entrepreneurial dream sells financial freedom. The numbers say most people pay for independence with their bank accounts.
So how much do entrepreneurs make? It depends on whether you incorporate, which industry you pick, and whether you can survive long enough for the income to catch up. For most founders, the answer is less than they expected and less than they would have made staying employed.
The Inequality Nobody Mentions
When researchers measure how much do entrepreneurs make, averages lie. Eighty percent of total entrepreneurial income flows to business owners earning over 100,000 dollars annually. The other 20 percent gets split among everyone else.
Put differently, 86.3 percent of small business owners earn under 100,000 dollars per year. Thirty percent don’t pay themselves anything at all. These aren’t failed businesses necessarily. They’re just businesses that don’t generate enough profit to support their owners at the income level a regular job would provide.
The real split happens between incorporated and unincorporated businesses. Incorporate your company and you earn 36 percent more per hour than salaried employees with similar backgrounds. You also work longer hours, so the annual gap gets even wider.
Stay unincorporated as a freelancer or solo consultant and you earn 16.5 percent less than employees. Most people choose this path for flexibility, not wealth. Since unincorporated workers vastly outnumber incorporated entrepreneurs, the average across all self-employed people shows them earning less than regular employees.
The wealthy entrepreneur running a scaled company is real. So is the struggling freelancer barely hitting median income. They both count as entrepreneurs in the statistics, which makes the question of how much do entrepreneurs make impossible to answer with a single number.
The First Five Years Hurt
Starting a business costs money before it makes money. At age 25, the average entrepreneur earns 27,000 dollars while employees make 29,000. You’re losing from day one.
By 30, that flips. Entrepreneurs pull in 55,000 versus 45,000 for employees, a 22 percent lead. The gap keeps widening. At 55, entrepreneurs earn 134,000 dollars annually while employees make 79,000. That’s a 70 percent premium after three decades of grinding.
Here’s the part that matters. Most entrepreneurs starting new businesses run those businesses at a loss initially. But they don’t report negative personal income because they’re working other jobs or running other ventures simultaneously. The new business bleeds cash. The side income keeps them afloat. It takes years before the business income exceeds what a job would have paid.
Research comparing similar workers found entrepreneurs earn 4 to 15 percent less per year than employees. Compound that over a career and you’re looking at serious money left on the table. The entrepreneurial premium exists, but only after you survive long enough to see it.
Where You Are Matters More Than You Think
Ecuador has the highest entrepreneurship rate in the world at 33 percent of adults. GDP per capita sits below 20,000 dollars. High entrepreneurship rates don’t correlate with high income. Often it’s the opposite. When formal employment options disappear, people start businesses out of necessity, not opportunity.
The United States hit 19 percent of adults actively starting or running businesses. Nearly 5.5 million new businesses formed in 2023, up 56.7 percent from 2019. Starting a business got more popular. That doesn’t mean it got more profitable.
Across 51 economies studied, 33 countries reported more people with decreasing household income than increasing. The global economy still hasn’t fully recovered from pandemic disruption, and entrepreneurs feel it harder than salaried workers because they can’t fall back on steady paychecks when revenue drops.
Industry choice changes everything about how much do entrepreneurs make. Information technology entrepreneurs earn a median of 156,909 dollars. Retail and wholesale brings 125,808 dollars. Management consulting yields 107,142 dollars. Pick the wrong industry and you’re starting from a lower ceiling.
Location matters too. Entrepreneurs in New York, Connecticut, and Washington D.C. earn the most. Hawaii, Mississippi, and Arkansas earn the least. Cost of living, local industry mix, and available capital create massive geographic differences in entrepreneurial income.
The Survival Filter
Ninety percent of startups fail. Only one in ten makes it. Among survivors, 78 percent report profitable businesses. That means 22 percent operate unprofitably even after clearing the initial survival hurdle.
The hardest milestone is the first 100,000 dollars in annual recurring revenue. Sixty-eight percent of startup-stage entrepreneurs say this is where businesses die. For established businesses, the 101,000 to 500,000 dollar range becomes the next wall. Most businesses never scale past these points.
Fifty-four percent of entrepreneurs cite financing as their biggest persistent challenge. Sixty-four percent start with less than 10,000 dollars. Forty percent use only personal funds. Another 27.6 percent work other jobs to fund the business. When you ask how much do entrepreneurs make, consider that many are making nothing from the business itself while burning savings or salary from employment they haven’t quit yet.
The Expectations Problem
Americans think you need 270,000 dollars a year to be successful. Generation Z raises that to 587,797 dollars. The median entrepreneur makes 65,500 dollars.
This gap between expectation and reality explains why 49 percent of people who want to start businesses never do it. They fear failure, and the numbers say that fear is rational. Thirty-five percent worry about inconsistent income. Twenty-seven percent lack complete business plans. These aren’t irrational concerns. They’re accurate assessments of entrepreneurial risk.
The entrepreneurs who persist and survive do eventually see higher earnings growth than paid employment. But you have to be part of the 10 percent who make it past the first few years. Then you have to scale past the first major revenue milestone. Then you have to avoid the mistakes that take down profitable businesses in years five through ten.
Each filter removes more people. The ones who make it through earn substantially more than employees. The question is whether you can survive the filters that eliminate nine out of ten attempts.
The Income Underreporting Debate
Some researchers argue entrepreneurs earn more than reported because they underreport income. A study using food expenditure as a proxy found self-employed people spend significantly more on food than employees with similar stated incomes. The gap suggests underreporting of 10 to 40 percent.
If true, this would eliminate the income penalty for entrepreneurship entirely. The self-employed would actually earn more than reported data shows, potentially by large margins.
The problem is the assumption that entrepreneurs and employees have identical food spending patterns. Entrepreneurs expense business meals, meet clients at restaurants, and network over lunch and dinner. Higher food spending might reflect business necessity rather than hidden income. When studies focus only on groceries consumed at home, the income gap shrinks to about 3,000 dollars annually.
Even generous adjustments for underreporting suggest entrepreneurs make 7 to 30 percent more than data indicates. That helps close the gap but doesn’t fundamentally change the picture. Most entrepreneurs still earn less than or comparable to what employment would pay, especially in early years.
Why People Do It Anyway
Seventy percent of entrepreneurs start businesses seeking career or lifestyle change. Sixty percent want autonomy. The decision to start a company rarely comes down to pure financial calculation because the financial calculation often argues against entrepreneurship.
Incorporated entrepreneurs work longer hours than both unincorporated workers and employees. They face higher income volatility. Their earnings rise more slowly over time compared to employees in most cases. These factors suggest non-monetary benefits drive many people to start businesses despite financial penalties.
The choice between growth and control affects outcomes dramatically. Entrepreneurs who prioritize growth by taking investment and bringing on cofounders build bigger companies and earn more. Those who prioritize control by avoiding outside capital and maintaining ownership earn less but keep decision-making power. You can optimize for money or autonomy, rarely both.
What This Means If You’re Thinking About It
The median entrepreneur earns 65,500 dollars. Most make under 100,000 dollars. Thirty percent pay themselves nothing. You’ll probably earn less than employees for several years before potentially earning more, assuming your business survives.
Incorporating matters. Unincorporated self-employed workers earn 16.5 percent less than employees. Incorporated entrepreneurs building companies with employees can earn 36 percent more per hour, but you have to successfully scale beyond solo operation.
Industry selection significantly impacts earnings. Technology entrepreneurs make median salaries over 150,000 dollars while other sectors earn substantially less. Pick an industry with strong economics or accept lower income as the cost of doing what you prefer.
The 90 percent failure rate means nine out of ten entrepreneurs don’t beat the median. The wealthy entrepreneur represents the exception. The person working longer hours for less money while calling themselves their own boss represents the rule.
If you’re asking how much do entrepreneurs make because you’re considering starting a business, here’s the honest answer. Less than you expect, less than your employed friends in the beginning, and potentially more after a decade if your business survives and scales. The dream sells financial freedom and unlimited upside. The reality delivers independence at the cost of income stability and security, often for years before any substantial reward shows up.
Most people who romanticize entrepreneurship focus on the 10 percent who make it. The data focuses on the 90 percent who don’t. Both perspectives are accurate. The question is which group you’ll join, and whether the independence is worth the financial sacrifice even if you never see the premium that successful entrepreneurs eventually earn.
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Sources
- Hostinger – 33 Entrepreneurship Statistics in 2025
- NorthOne – 20 Entrepreneur Statistics to Know in 2025
- DemandSage – 50 Entrepreneurship Statistics 2025
- Whop – 100+ Entrepreneurship Statistics for 2025
- JoinGenius – 31+ New Entrepreneur Statistics 2025-2030
- 80,000 Hours – What the Literature Says About Earnings of Entrepreneurs
- HEC Paris – Earnings from Entrepreneurship Study
- Fortune – Entrepreneurs Can Make Up to 70% More Than Paid Employees
