The Average Income for Entrepreneurs—Find Out Your Standing

According to Clayton Caggiano, an Assistant Vice President and Business Development Associate at Morgan Stanley who works with entrepreneurs regularly, founders face several obstacles. For example, you have to be “okay forgoing the salary for an ultimate payoff (which also isn’t guaranteed),” he said.

That uncertainty explains why figuring out whether you’re doing “well enough” financially as an entrepreneur feels impossible. There’s no clear benchmark, and comparing yourself to others—from viral success stories to your salaried friends—often doesn’t really work.

What the Numbers Actually Say

If you’re hunting for a single number, the average entrepreneur makes about $77,000 per year, which is slightly higher than the median employee salary of about $70,000.

But that average hides a massive gap. Business owners who employ others report a median personal income of $110,000, nearly five times the $24,000 of non-employer owners. That $86,000 difference shows how hiring employees fundamentally changes your earning potential.

The Brutal Early Years

Caggiano mentioned working with a successful repeat entrepreneur who is “not taking a salary and will not until he is profitable.” This founder can afford that choice because he has “a large portfolio as a fall back to support his lifestyle.” But first-time entrepreneurs typically don’t have that option. They “rely almost solely on their ownership stake and sweat equity,” Caggiano said.

Minneapolis Federal Reserve research tracked entrepreneur income by age and found that at 25, the average entrepreneur made $27,000 annually while salaried employees earned $29,000. Most businesses take 18 to 24 months to hit profitability, and plenty don’t make any profit in year one.​ The JPMorgan Chase Institute analyzed banking data from small businesses and found that 50% hold fewer than 15 days of cash buffer. When your checking account has less than two weeks of operating expenses, one delayed payment or unexpected cost can wreck everything.

The Timeline for When Things Improve

By age 30, entrepreneurs who stick it out earn $55,000. That’s a 22% premium over employees, who earn $45,000. By 55, that gap widens dramatically: persistent entrepreneurs pull in $134,000 annually compared to $79,000 for employees. That’s 70% more.​

But “persistent” excludes everyone who quit, got a regular job, or failed. Many entrepreneurs work side jobs or run multiple businesses while their main venture finds its footing. Many businesses simply don’t make it.

Your Industry Changes Everything

Consulting and professional services businesses can hit 10%-30% net profit margins because labor is the main cost. Restaurants scrape by on 3%-9% margins. Retail businesses often see just 2%-6%.

A solo consultant might gross six figures but take home less after taxes and health insurance than salaried workers earning the same amount. Service businesses with employees face different math entirely: higher revenue potential but also payroll, benefits, and operational complexity.

Revenue and Owner Income Are Different Things

One common mistake is confusing business revenue with personal income. A business pulling in $500,000 in annual sales might leave the owner with $60,000 in take-home pay after expenses, debt service, and reinvestment. During growth phases, many owners deliberately underpay themselves to fund expansion, making year-to-year income comparisons unreliable. Federal Reserve data tracking small-business cash flows confirm this volatility: expenses and revenues often arrive in patterns that are hard to predict.

If you’re an entrepreneur, you should only compare yourself to businesses at your stage and in your industry, not to viral success stories. If you’re in years zero to two and barely paying yourself, your situation is normal. If you’re past year five and still struggling, examine your margins and pricing. Entrepreneurs who make it past the survival phase and build employer businesses can substantially out-earn salaried peers, but only after weathering the lean early stretch Caggiano described.