Average Small Business Revenue: What To Know
One of the best parts of being a small business owner is the unlimited earning potential—unlike the steady but capped 1-3% raises typical in a 9-to-5 job. As a business owner, there’s no limit to how much revenue you can generate (check out How to Value a Business on Revenue to learn more). For those with exceptional skills and an entrepreneurial spirit, it’s an opportunity to build a business that serves others while creating a sustainable income.
Small business ownership requires tracking everything from operating revenue to your business expenses. Poor money management, bad cash flow, and even not documenting everything accurately are some of the main reasons why small businesses close in the first five years of operating. It's important to set your business up for success from the start to not only provide a great service or product but also to make a profit long term. Businesses that operate as sole proprietors without any employees make significantly less money than those companies with people on staff.
What Is the Average Small Business Revenue?
The average small business revenue depends on several factors. Whether the owner is male or female, the length of time in business, and whether they have employees or not will impact the average gross revenue for a small business. Additionally, if companies carry a lot of unearned revenue, it can impact their overall financial picture as well. What is unearned revenue? It's something that has been paid for but not delivered yet and cannot be recorded as revenue just yet.
On average, single-owner businesses generate about $44,000 annually, with two-thirds earning less than $25,000 per year–many operating from home. However, annual business revenue tends to climb as the team grows. For example, businesses with just 1-4 employees see average annual revenue jump to $387,000. With 9 employees, small businesses can even reach $1 million or more in revenue.
How Much Revenue Should a Small Business Have?
To be considered a small business, you need to make less than $27 million. Anything more than this is no longer considered a small business. Additionally, your designation as a small business can be impacted by your industry and the number of employees you have working for you. Some wholesalers for instance are considered small businesses when they have fewer than 225 employees, but fish sellers can only have 100 or fewer employees and be considered small businesses. It's also important to bill your customers correctly so that you don't end up losing money through revenue leakage. That way you can make as much revenue as possible.
Businesses without any employees make an average of around $46,000 per year.
If a company has up to 4 employees, the average revenue jumps to $387,000 per year.
Businesses that employ 10-19 employees generate $2,164,000 on average per year in revenue.
Women small business owners make on average significantly less than men in small business. In 2007, women made an average of $130,000 per year operating a small business while men made an average of $570,000.
How Many Small Businesses Make $1 Million in Revenue?
When the average small business revenue is $1 million, the company likely has at least 5-9 employees working for them. Currently, there are around 36,000 small businesses that bring in $1 million to $2.5 million per year. This number continues to increase as more people start and operate small businesses.
Financial Assistance & Loans
Savvy entrepreneurs use revenue based financing to grow their businesses and boost earnings. For example, fleet business owners can quickly increase revenue by hiring new drivers and adding vehicles. The right loan can help cover leasing, insurance, and payroll before the extra income starts rolling in. Expanding to a new location in a high-traffic area can also attract more customers, and a loan can make it possible to secure the space and stock up on inventory.
At Fora Financial, we offer numerous loan products to help small businesses reach their company goals and grow over time.
Small Business Loans
Getting the right small business loans can mean the difference between success and failure in your small business. We offer loans in amounts as low as $5,000 and up to $1.5 million to use on your business needs.
Revenue Advance
We make it possible to qualify for a revenue advance at Fora Financial. These advances can help you still operate your business, even when your cash flow varies from month to month. When you deal with contracts and other issues that might slow your business down, these loans make it easy to keep paying your staff and your business bills consistently.
Installment Loans
Another great option to grow your business is with an installment loan. These types of loans are excellent for buying large assets like vehicles and machinery, or even leasing or building new commercial properties.
Conclusion
Building a business is hard work, but with dedication and expertise, you can grow your company from one person to 50 to 100 or more. The average small business revenue will rise as you are able to reach more customers, add new staff members, and leverage the lending from our team at Fora Financial to grow.
Since 2008, Fora Financial has distributed $4 billion to 55,000 businesses. Click here or call (877) 419-3568 for more information on how Fora Financial's working capital solutions can help your business thrive.
