Do entrepreneurs make a lot of money? That’s a very subjective question that depends on several factors. First, what business is the entrepreneur in? What part of the country or world do they work from? How high is the demand for the service or product they provide? How long have they been in business? How much money is considered “a lot of money?”
While a variety of factors go into an entrepreneur’s salary, averages can help us get a better idea of the general amount an entrepreneur makes. Do entrepreneurs make a lot of money? Check out the averages below for starting, junior, and senior entrepreneurs.
Entrepreneur Earnings by Seniority
Starting entrepreneurs – $36.07/hour; $75,030 yearly
Junior entrepreneurs – $53.18/hour; $110,610 yearly
Senior entrepreneurs – $82.50/hour; $171,610 yearly
Starting entrepreneurs make around $75,000 per year, depending on the industry and location. United States Federal Census Data shows that the average American household makes about $52,250 each year. That means even new entrepreneurs can make an income that’s about 43.6% higher than the average American’s.
Junior entrepreneurs can make around 110% more per year than the average American, and senior entrepreneurs might make 227% more per year than the average American.
According to that data, it seems that entrepreneurs make a lot of money. But without considering the startup and operating costs of owning and running a business as well as the time spent managing that business, we don’t have a true picture of how much an entrepreneur makes.
Startup and operating costs
Startup and operating costs come out of an entrepreneur’s pocket in many cases. Startup and operating costs a business might accrue include:
- Phone and utilities
- Employee salary and benefits
- Fixtures and furniture
- Licensing and taxes
- Marketing budget
- Professional services
An entrepreneur can’t make any money unless these costs are paid. While starting out around $75,000 per year may sound like a lot of money, once you add in these costs, you’re left with a much smaller amount.
That’s one of the reasons a working budget is so important to have if you want to be successful.
Time spent running the business
In addition to concrete costs and fees that entrepreneurs must deal with, we also have to consider the amount of time spent running the business as we determine how much an entrepreneur truly makes. You’ve probably heard the phrase “Time equals money,” and in this case, it’s never been more true.
If you assign yourself an hourly rate based on your yearly income – let’s use the starting entrepreneur example of $36.07/hour – you’re essentially saying that one hour of your life is worth $36. Think of the number of hours you spend managing your business every day, week, month, year. That $36/hour adds up quickly, doesn’t it? Although you won’t see those costs on your paycheck, it’s still time spent and should be considered part of the cost of running a business.
Considering the startup and operating costs as well as the time that must be spent managing and running a business, we can see that entrepreneurs make a lot of money but also do a lot of work in exchange for what they get. Entrepreneurship is not a path for those who look for shortcuts or want to get rich quick – it’s a lifestyle. If you manage your finances properly, it can be a very lucrative lifestyle.
Entrepreneur salary data courtesy of Sokanu.