Percentage of US businesses that generate under 1 million dollars?

What percentage of businesses in the US generate under 1 million dollars income?

Answer: In 2024 approximately 91% of small businesses in the United States generate less than $1 million in revenue annually. This figure underscores the significant number of small enterprises operating with relatively modest earnings compared to larger corporations. Additionally, about 86% of small business owners earn an annual salary of less than $100,000, and 77.7% of nonemployer establishments (businesses without employees) make less than $50,000 per year.

Small Business Revenue Statistics

1. Overall Small Business Statistics:
   • According to the Small Business Administration (SBA), about 99.9% of businesses in the US are classified as small businesses, and a significant majority of these businesses generate less than $1 million in annual revenue​.
   • Specific data from 2018 indicated that only about 9% of small businesses made more than $1 million in revenue annually, which implies that around 91% of small businesses generated less than $1 million in revenue​.
2. Non-employer Businesses:
   • Non-employer businesses, which are businesses without any paid employees, make up a substantial portion of small businesses. According to the U.S. Census Bureau, 78% of non-employer establishments make less than $50,000 in annual revenue​​.
   • Of these non-employer businesses, only about 0.2% generate more than $1 million annually​.
3. Revenue vs. Profit:
   • While the statistics above primarily focus on revenue, translating these figures to profit can be complex as profit margins vary widely across different industries and business models.
   • Many small businesses operate on slim profit margins. For example, a business with $1 million in revenue might only have a 5-10% profit margin, resulting in $50,000 to $100,000 in profit.
4. Employer Businesses:
   • Employer businesses, which have paid employees, also largely fall under the $1 million revenue mark. It is estimated that a similar percentage (around 91%) of these businesses generate less than $1 million in annual revenue.

Challenges and Profit Margins

Several factors contribute to the lower profit margins and revenues for the majority of small businesses:

• High Operating Costs: Many small businesses face significant operating expenses relative to their revenue.
• Cash Flow Issues: Cash flow management is a critical challenge, with 82% of small businesses citing cash flow problems as a significant issue.
• Market Demand: Around 42% of small businesses fail due to a lack of market demand for their products or services​.
• Marketing and Competition: Effective marketing and competition are significant hurdles, with many businesses unsure about the effectiveness of their marketing strategies and 19% failing due to competition.

Wrapping Up…

The vast majority of small businesses in the United States generate less than $1 million in annual revenue, and by extension, likely generate less than $1 million in profit due to the typical profit margins within small businesses. This high percentage reflects the challenges and competitive nature of the small business landscape in the U.S.