Do you have dreams of owning a small business?
The internet has made it easier than ever to build and market a small business. And if you have a profitable skill (or are willing to learn one), then you too might be able to join the ranks as a small business owner, becoming your own employer and designing a career that allows you to work, earn, and live how you want to. In this article, we’re diving into some of the specifics of what you’ll want to know if you’re interested in owning a small business, including the average income of a small business owner and some creative small business ideas that might be worth pursuing. So if you’re ready to ditch the traditional 9-to-5 once and for all, read on and learn about some of your options.
What is Considered a Small Business?
Years ago, if you asked someone for examples of small businesses, they might have come up with things like neighborhood coffee shops and retail stores—physical places of business with few employees and a mostly localized presence. Those types of businesses are still around now, but the world of small business has expanded in many different directions.
Today’s small business owners operate in a wide variety of fields, from journalism and web design to teaching and cosmetology. Many of them run their businesses from home, instead of from an office building or retail store. And in plenty of cases, the modern small business owner also runs their operation solo. As of 2020, 25.7 million of the country’s 31.7 million small businesses are employee-free.
Small Business Definition
The Small Business Administration (SBA) definition of a small business is one that does not exceed a certain revenue and/or number of employees within their specific industry. In construction, for example, a small business is one that does not exceed $36.5 million in annual sales. In wholesale trade, a small business is one that has 100 or fewer employees.
That being said, many modern small business owners operate well below these standards, working as freelancers or other types of solo entrepreneurs with flexible, often non-traditional business structures.
Types of Small Businesses
Asking yourself, “What type of business should I start?”
When you’re embarking on a small business venture, you want to consider the type of business you want to operate in addition to the product or service you plan to sell. There are four basic types of small businesses, and each functions a bit differently in terms of structure and tax status:
- Sole proprietorship: This is the easiest type of small business to start. In a sole proprietorship, you are both the owner and the business, meaning all profits and losses are yours alone.
- Partnership: Partnerships are small businesses owned by two or more people, with profits and losses shared among the group. If you go this route, you’ll want an ironclad partnership agreement to protect the rights and expectations of all invested parties.
- Limited liability corporation (LLC): An LLC separates your personal assets from your business assets, offering protection in the event of bankruptcy or lawsuits. It can be operated solo or with one or more partners.
- Corporation: Corporations are independent legal entities from their owners. Within this designation, there are various types of corporations (such as C corps, S corps, and B corps) that carry specific tax benefits and drawbacks.
Aside from partnerships, each type of small business can be run by just one person. The biggest differences are in liabilities and taxes, so as your business grows, it may be worth working with a financial advisor to figure out what structure makes the most sense for you.
What Does it Take to Own a Small Business?
How easy or difficult it will be to get your small business off the ground depends largely on what you’re interested in doing. Some small businesses have very few startup costs or operational needs, while others require a larger risk and investment upfront.
In more general terms, starting and owning a small business requires ingenuity and organization. A tireless work ethic doesn’t hurt either, though it’s certainly possible to own a small business without working yourself to the bone.
Small Business Startup Costs
The startup costs for a small business are highly dependent on the business itself. Things that you might have to consider include:
- Office space
- Incorporation fees
You can use the SBA’s startup cost calculator to get a general idea of how much cash you’ll need to get your small business going.
Small Business Overhead Costs
Overhead costs are those related to the continuous operation of your business. They’ll likely include the startup costs mentioned above, since those can be ongoing, as well as things like:
- Health insurance
- Payroll (if you’ll have employees)
- Shipping costs
Average Small Business Revenue
The average non-employee small business brings in $46,978 in revenue each year, while small businesses with one to four employees average $387,000 in revenue. Revenue continues to increase as the number of employees increases.
These revenue numbers are calculated before taxes and expenses. As such, the take home pay for an owner is quite a bit less than the overall revenue for the business.
Average Salary of a Small Business Owner
Speaking of take home pay, the average income of a small business owner is $71,813 a year. This includes owners of small businesses of all sizes, so the number is skewed high. In general, most small business owners (86.3%) make less than $100,000 per year.
15 Creative Small Business Ideas
You don’t need to reinvent the wheel to start a profitable small business. Here are 15 small business ideas for anyone looking for a career pivot.
1. Affiliate Marketing
Become an affiliate marketer and get paid by brands to advertise their products. You’ll get a commission on every sale you facilitate, and many affiliate marketers are able to make additional money just for driving traffic to a company’s site.
If you’re skilled with a needle and thread, consider becoming a seamstress and offering tailoring, alterations, and other related services. You can also expand into original designs or specialize in certain industries such as wedding or prom alterations.
3. Wedding Photography
A talented wedding photographer is always going to be in high demand. You’ll need to make a big initial investment on equipment, but you’ll also have the ability to make thousands of dollars per weekend, which can quickly help you recoup your startup costs.
4. Web Development
Know your way around some code? Make it profitable as a freelance web developer. This job can be done completely from your computer at home and often includes routine work with clients in addition to initial site building.
5. Freelance Writing
There’s a ton of opportunity out there for a good freelance writer. Choose a niche that matches your interests and expertise, then start sourcing clients. The bigger your portfolio gets, the easier time you’ll have finding more work.
6. Nail Artistry
Many people are looking for more than just a simple coat of polish when they get their nails done. Become a nail artist and offer up impressive designs that basically market themselves through social media sharing.
7. ESL Teaching
Help people learn English as an ESL teacher. You can complete your Teaching English as a Foreign Language (TEFL) certification online, then work with non-native English speakers as a tutor or language coach.
8. Pet Photography
Pets aren’t just adorable—they’re also part of a billion-dollar industry. Many pet parents are willing to spend big money on photo shoots of their furry, finned, or feathered friends, so become a pet photographer and capture cuteness at its best.
9. Spanish Interpreting
As a Spanish interpreter, you can be hired by businesses and other organizations that need help communicating from Spanish to English or vice versa. Fluency in Spanish is obviously key here, and depending on where you live you may need specialized licensing as well.
10. Travel Writing
Make money off of your love of traveling by working as a freelance travel writer for online and print publications. The more established you get, the more that travel brands and publishers may fund both your adventures and your income.
11. Video Game Design
If you love creating video games as much as playing them, then start a small business as a video game designer. Make, market, and sell original games, or join developer teams on a contract basis to help bring their ideas to life.
12. Freelance Editing
Being a freelance editor often goes hand in hand with being a freelance writer, but you can pursue this field on its own too. Necessary skills include a good grasp of grammar and spelling, as well as the ability to edit content on all sorts of different topics.
13. Freelance Makeup Artistry
As a freelance makeup artist, you can sell your skills for events ranging from fashion shows to weddings, with maximum control over your rates and hours. Being self-taught is fine, but look into certification classes to increase your chances of success.
14. Forensic Artistry
A forensic artist is hired by law enforcement agencies to help visualize crime scenes, criminal suspects, and other critical pieces of information. If you have experience in graphic artistry, check out the International Association for Identification (IAI) for information on how to get certified in the field.
15. Freelance Journalism
Work as a freelance journalist and help tell important stories without being tied down to a specific media publication. Writing, researching, and storytelling skills are obviously important here, and you’ll also need to be able to effectively conceive of and pitch your ideas.
Which Business Will You Start?
There are so many ways to become a small business owner. Follow your interests and your passions, and look for ways to take the things that you’re good at and market them to other people. It won’t always be easy, but it can absolutely be a fulfilling way to earn a living.
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