How much do entrepreneurs make?
Q. How much do entrepreneurs make really?
A. Read on
According to the Cambridge dictionary, an entrepreneur is ‘someone who starts their own business, especially when this involves seeing a new opportunity’.
This can mean a lot of things. From someone who owns a small shoe shop to someone who has built a multinational, technology corporation. So, of course, the salary of two such entrepreneurs will vary dramatically.
But there is data we can refer to, to understand how much entrepreneurs make on average, and for context, how this compares to general workers and business leaders.
How much does the average person make?
When it comes to the general population of employed people, average wages per country reflect a variety of complex macroeconomic factors.
According to data compiled by the Organisation of Economic Co-operation and Development (OECD), it was found that:
- The average wage in the USA is $77,463
- The average wage in the UK is $53,985 (£43,022)
- The average wage in Germany is $58,940 (€54,716)
- The average wage in Australia is $59,408 (AUD 89,944)
Following the upheaval of the pandemic and according to Pew Research, salaries have generally increased across industries; with those in hospitality seeing the biggest rises.
There has also been more turnover with many quitting their jobs at a ‘record pace’, particularly in lower-paid sectors such as retail.
Perhaps for consumers, given rising inflation, they’re prepared to retrain to get into senior roles or to switch jobs more quickly to find better pay and benefits elsewhere.
How much do CEOs make?
Whilst CEOs aren’t technically entrepreneurs, they likely have strong entrepreneurial traits which make them successful in business, so it’s worth analysing their compensation.
A CEO’s salary is normally made up of a base salary, a bonus, stock-based compensation, and a retirement plan, as shown with the McDonald’s CEO salary, Chris Kempczinski, reported by Restaurant Business, who has a base salary of $1.4 million but a total package of $19.2 million.
According to research from the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO), the average compensation of an S&P 500 company CEO in 2022 was $16.7 million.
Which for reference, means that the average S&P 500 CEO was paid 272 times more than the average worker.
Working your way up the career ladder certainly pays off! And it comes without the inherent risks of starting your own business, but it’s not the right path for everyone.
According to CNBC, some other famously well-paid CEOs include Tim Cook of Apple, who receives a compensation package of $99 million. Bill Ready at Pinterest, earning $123 million. And Stephen Scherr at Hertz earning $182 million.
How much do entrepreneurs make?
As mentioned, as the profile of an entrepreneur varies, so does the payoff. According to research from financial services firm Bankrate, the average small business owner salary in the US ranges from $83,000 – $126,000, which is comfortably more than the average American makes, as outlined above.
The average salary will likely vary by location, with Shopify finding that when it comes to labour costs, tax rates and other costs, the top five ‘business-friendly’ US states for small business owners are:
- Colorado
- Deleware
- Georgia
- Minnesota
- North Carolina
When it comes to startups, according to research from accounting and bookkeeping firm Pilot; founders who had third-party funding from venture capital (VC) firms were more likely to have higher salaries.
Over nine in ten (91%) of those who were paid between $100 – 200K annually were VC-backed.
However, nearly half (46%) of those surveyed pay themselves less than $100,000 annually.
Five per cent of respondents revealed they paid themselves no salary at all.
Perhaps, these more modest salaries are surprising. When you consider the profile of a tech founder, or an entrepreneur broadly speaking, the glamorous stereotypes that come to mind of fast cars, champagne and caviar are sometimes at odds with reality.
And the reality is that starting a business is competitive and the marketplace is more saturated every year. Margins are slim and sacrifices are made at the start of the journey and before you or your company is in profit.
Is it all about money anyway?
No. Though of course, it’s important.
The financial reward gained from a successful enterprise is part of the journey and the inherent achievement of building a functioning business.
The research given above is just a guide and an indication of what others who have come before have achieved.
What you can make as an entrepreneur is up to you.
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