Who Are Today's American Entrepreneurs? A Snapshot of U.S. Small Business Owners

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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• How to Create A Great Investor Pitch Deck for Startups Seeking Financing
• 17 Key Lessons for Entrepreneurs Starting A Business

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

Managing cash flow and needing working capital are the predominant challenges for most small business owners, and the main reasons they seek funding.

• 53% don’t apply for funding, mostly due to either having sufficient capital or to debt aversion.
• 80%+ of those seeking funding go to traditional financial institutions.
• 73% of small businesses want to get financial advice from banks and lenders; 15% ask loan brokers for advice.
• 89% of small businesses seek lines of credit or business loans; 30% want business credit cards.
• Micro-businesses (those with less than $100,000 in revenues) and younger companies (0-2 years old) seek traditional loans, while growing companies prefer lines of credit.
• Micro-businesses apply for merchant cash advance products much more than growing companies do.

Online lenders

• The more revenue a company earns, the less they use online/alternative lenders.
• Smaller businesses get more funding from online lenders than from traditional financial institutions.
• Online lenders receive the lowest satisfaction scores and small banks receive the highest from people who apply and receive funding.
• High interest rates and unfavorable repayment terms are the main reasons small businesses are dissatisfied with online lenders.
• For small and large banks, the main reasons for dissatisfaction are the difficult application process and the long wait for a credit decision.

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