Small Business Annual Sales — How Much Money Do They Make?

What are the average annual sales of small businesses? What percentage of businesses bring in more than $1 million in sales? How many make less than $50,000 a year? Here’s what ZenBusiness affiliate’s small business surveys and data from the Census Bureau and SBA Office of Advocacy show.

How much money do small businesses really make? What about solopreneurs and gig workers? Do many small businesses bring in revenues that exceed a million dollars a year? Do small business owners live the American dream? Vacation at luxury resorts? Fly off to exotic locations in their private jet while their legions of employees keep everything running smoothly back home? Or after they calculate annual revenue for the year, do they struggle to make ends meet? When it comes to gross revenue, where does the myth end and reality begin?

The answer depends on many variables, but, for the most part, businesses can be divided into two broad categories.

On one hand, there is the relatively small number of businesses that have 10 or 20 or more employees. Some of these — a very, very few — have concepts, business models, and leadership that venture capitalists and private equity firms believe could evolve into high-growth companies with hundreds of thousands in revenue generated. Although they’re a tiny minority of small businesses, they’re the ones that make the news when they grow from scrappy startups into the Googles and Apple Computer companies of the world.

On the other hand, there are the rest of the small businesses in the country. These are the everyday businesses that don’t interest venture capitalists and other investors who are looking for big paydays.

Market Dynamics: Everyday Small Businesses

Everyday small businesses are the kinds of businesses that aren’t likely to revolutionize their industries; their primary business operations are pretty straightforward (but still valuable). They’re the gig workers, solo businesses, and business owners with just a handful of employees. They’re the software developers, electrical contractors, freelance ghostwriters, salvage companies, bagel store owners, consultants, automotive parts dealers, pet store owners, Internet publishers, accountants, small manufacturers, and other companies that provide needed products and services that aren’t revolutionary in concept. They started a small business in their town or at the local strip mall. They’re the businesses in the local industrial park or office building downtown. And they are the home-based businesses in the local neighborhood, or maybe even a basement. They generate enough income to cover their operating costs (and hopefully make a net profit), but they don’t generate the big bucks. Some are side gigs or part-time operations. Many are full-time businesses.

For the most part, these small businesses have few employees. For example, according to U.S. Census Bureau statistics, in 2022, there were about 5.2 million small businesses with fewer than 500 employees (and many of those had fewer than 20 employees). 55.7% of small businesses with employees had fewer than 5 employees, according to a 2022 report by County Business Patterns.

In fact, the majority of U.S. small businesses are very small. According to the 2022 Nonemployer Statistics, nearly 30 million businesses didn’t have employees to begin with. These non-employers are self-employed individuals who pay taxes but are not counted in the monthly jobs reports that are based on payroll data because they do not have a payroll.

Actual Revenue for Typical Small Business Annual Sales

So, how much money do these small businesses really make? According to historical data, it really depends. Some have pretty robust income statements, and some have a much lower cash flow (and they might even prefer it that way, if the business is just a small side hustle for one of their hobbies).

But in 2020, the sales figures were particularly dire for many small businesses. When ZenBusiness looked at the U.S. results of the 2020 COVID-19 small business economic impact survey, the team found that 43% of businesses that said they were operating full-time were estimating annual sales of under $50,000 for the year. In 2018, only 37% of full-time U.S.-based businesses reported sales under $50,000. The pandemic had a massive effect on market conditions because of big changes in customer behavior, and small businesses were hit harder than most.

Earnings problems due to the pandemic continued for many small businesses in the first quarter of 2021. The U.S. Census Bureau Small Business Pulse survey reports, for example, that in the first week in March, 71.8% of small businesses were still seeing a moderate to large negative impact on business from the pandemic.

Annual sales of larger small businesses that responded to the survey ranged lower in 2020 than they did in 2018. In 2020, only 27% estimated their total revenue for the year would be over $200,000, whereas 32% reported sales over $200,000 in 2018. To help boost net revenue and streamline outreach, many small businesses are exploring smart automation tools (and not just relying on accounting software alone). Check out this guide on AI sales assistants, which can help teams automate lead qualification, follow-ups, and sales engagement – making it easier to scale without expanding headcount.

Multi-Year Look At Annual Revenue from Sales

How did 2020’s sales compare to sales reported by these survey takers in previous years? Overall, a little less than half of the small businesses that visited the site reported earnings of under $50,000.

US Government Statistics

How does the information from the ZenBusiness affiliate survey stack up against data from other sources? Because this report used different income ranges than other sources and didn’t sort its data by non-employers vs. employers as government agencies do, there’s no way to draw direct comparisons. But a December 2020 report from the Office of Advocacy shows that as of 2017, the average non-employer (excluding C-corporations) had receipts of $47,000. However, there were some significant differences by demographic group. The report found that the average of receipts for women ($27,000), veteran ($42,000), African-American ($22,000), and Hispanic ($36,000) non-employers were well below the national average. Both Asian and white non-employers individually averaged $48,000 in receipts.

Census data also showed that few small businesses have high sales. According to the 2016 U.S. Census statistics, the average annual sales for the nation’s million non-employers was only $46,978. In fact, a 2016 Federal Reserve Banks report found that 45% of the non-employers had revenues of less than $25,000 a year.

As noted, these government annual revenue figures were from 2017 and do not include drops in revenue due to the pandemic or any subsequent recovery.

Small Business Owner’s Net Income

What about profit on those sales? The survey that ZenBusiness affiliates conducted never asked respondents to indicate their net income from their sales revenue, but they did ask survey-takers to indicate what their household income is. The household income would include the owner’s salary, profits from the business (in most small businesses, the profits pass through to the owners), as well as any non-business income the business owner or their spouse brings in. That yielded an indirect picture of their company’s financial health.

Of the business owners in the U.S. who responded to that question, 31% had household incomes of $100,000 or more, and 35% had household incomes between $50,000 and $99,999.

By way of comparison, Payscale reports that the average salary of small business owner/operators is $65,486.

Note: This survey data was filtered to display only the responses from U.S. business owners.

Disclaimer: The content on this page is for information purposes only and does not constitute legal, tax, or accounting advice. For specific questions about any of these topics, seek the counsel of a licensed professional.