Behind the Boom in Solopreneurship: Who’s Starting Them and Why

Key Findings

• Solopreneurship is a deliberate way entrepreneurs start a business. More than four in five small businesses in the U.S. have no employees per the Small Business Administration, and Gusto’s 2025 New Business Formation survey shows solopreneurs often choose this model for the autonomy it provides. Immigrants and women, who make up 14% and over 50% of new solopreneurs, respectively, are powering this trend.

• Most solopreneurs start their businesses to gain control over their time and work. Fifty-four percent of new solopreneurs cited “being my own boss” as a top reason for starting a business, and 53% named flexible scheduling.

• Many new solopreneurs are creating economic activity beyond themselves, even without employees. One in three hired at least one contractor in 2024, and over half of those plan to grow their contractor base in 2025. This highlights a growing comfort with flexible work arrangements among solo founders. 

• Despite modest financing, solopreneurs are often profitable early. Nearly half started their business with under $5,000, and 84% of those who sought financing used personal funds. Yet 77% reported profitability in their first year, well above employer businesses, and 93% expect to be profitable in 2025.

Introduction

Since 2020 more and more workers in the United States have viewed entrepreneurship as a way to take control of their careers. In 2024 alone entrepreneurs filed 5.2 million new business applications, and early data from 2025 continue to show strength in small business starts. Although small businesses can range in size from zero to 500 employees, more than four out of five small businesses in the United States have no employees. 

Owner-only businesses, or solopreneurs, anchor the nation’s small business economy. Founders choose this model as a way to control when, where, and how they work. Gusto’s 2025 New Business Formation Survey asked new entrepreneurs what it was like to start a business in 2024; this report spotlights the experiences of new solopreneurs.

Solopreneurs are diverse, and powered by women and immigrants

Immigrants and women propelled solopreneur business starts last year. Fourteen percent of solopreneurs were immigrants, which is double the share of employer businesses. Entrepreneurs who are children of immigrants were 40% more likely to be solopreneurs than employers. Additionally, over half of solopreneurs are women. 

These figures show that solopreneurship is not a niche but a broad entry point into business ownership, especially for groups seeking flexibility and career autonomy.

More than half of solopreneurs cite career autonomy as top reasons to start a business

Asked to identify the top three reasons for starting their businesses, 54% of new solopreneurs chose “be my own boss” and 53% picked “work according to my own schedule,” far outpacing immediate income considerations. 

The autonomy story is even stronger for the groups powering today’s solopreneurship surge. Immigrants and women routinely say that career autonomy is a key motivator for starting their business, and solopreneurship offers this autonomy and flexibility through increased decisions around how and when to work.

Taken together, the data suggest solopreneurship is usually a conscious choice to own one’s time, not only a fallback when other options disappear. Solopreneurs are creating and structuring businesses that support how they want to work, and many are happy to keep their businesses at the current size. 

Solopreneurs thrive in the professional services sector

Nearly two-thirds of all professional-services start-ups in 2024 (think consultants, accountants, and other white-collar experts) launched without employees in 2024, the highest share of any sector. Community-services fields such as health care and education followed at 57 percent, while barely one quarter of personal-services ventures (retail, hospitality, food) began as solopreneurs.

This gap reflects the type of work performed in each sector. Professional services can scale their work without hiring extra hands, but a restaurant will always need cooks and servers. When solopreneurship is viable, entrepreneurs choose it as a way to work while maximizing their own flexibility and autonomy.

34% of solopreneurs hired a contractor in their first year

About 25% of solopreneurs plan to hire employees but haven’t yet done so. However, many are already busy creating work for others. More than one in three new solopreneurs hired at least one contractor in 2024. Fifty-three percent of these solopreneurs plan to increase the number of contractors next year and 46% expect to maintain their current level.

Small businesses have become increasingly comfortable with hiring contractors in the last half decade, and this trend has shown to be true even among solopreneurs.

The vast majority of solopreneurs are self-funded, but more than three-quarters turn a profit in the first year

More than two-thirds (69%) of solopreneurs needed start-up financing to launch their business in 2024, and that money generally came from the business owners themselves. A substantial majority of solopreneurs (84%) reached into their own pockets when they needed start up financing. Solopreneurs who self-funded their start up were most likely to use their personal savings (86%) and some borrowed off of their personal credit card (29%). 

That personal investment seems to pay off in the business’s early years. Seventy-seven percent of solopreneurs reported being profitable in their first year compared to only 54% of employers, and almost all (93%) of solopreneurs expect to be profitable in 2025 compared to 80% of employer businesses.

Nearly 20% of new employer businesses received loans from friends and family, but only 1% of new solopreneurs did so when starting in 2024. This could be because businesses without employees may be less expensive to start than employer businesses, and the entrepreneur was able to provide all of the needed financing themselves.

Almost half of solopreneurs start their business with less than $5,000

Solopreneurs launch cash-light: nearly half of all solopreneur businesses in 2024 started with less than $5,000 compared to only 10% of employer businesses. Low fixed costs, and the option to add contractors instead of W2 employees, help explain how these businesses can start lean and the vast majority expect to be profitable within the first two years.

Solopreneurs across industries report time management as a top operational challenge

Running a one-person shop means juggling every task alone, and solopreneurs feel the squeeze on both the clock and the bank account. Forty-one percent of all solopreneurs said time management is a major challenge, and we find that this is true across most industries. This is even more true among industries where time pressures are known. Forty-three percent of professional services businesses, where solopreneurs are likely compensated via billable hours, report time management as a top challenge. Nearly half of solopreneurs in the community services sector, which includes medical providers like physicians or therapists, also cite time management concerns.

Almost a third of all solopreneurs report cash flow management as an ongoing challenge. Small businesses, regardless of employee size, often run on increasingly tight margins. As solopreneurs launch their business, they experience these same challenges. Nearly 69% needed financing to start their business, which may have been used to smooth volatile cash flows as these businesses establish a consistent revenue stream.

Nearly half of solopreneurs who use GenAI use it to save time

About half of new solopreneurs used generative AI (GenAI) when launching in 2024, matching employer entrepreneurs’ uptake. However, solopreneurs use GenAI for somewhat different purposes. Nearly half (47%) of solopreneurs use GenAI to limit time spent on tedious tasks, something for which only about a third (37%) of employer business owners use GenAI.

Nearly ⅔ of solopreneurs use GenAI to assist them with marketing their business, but more than half of new personal service solopreneurs use it for customer service

The delegation pattern shows up in how founders deploy the tech. Nearly two-thirds (64 percent) of solopreneurs use GenAI for marketing, led by a striking 75 percent share in professional-services firms. Customer-facing trades put the bot on the phone: 52 percent of personal-services solos use GenAI for customer service, almost double the overall solo average. Sales (36 percent) and legal tasks (22 percent) round out the top functions. 

In short, GenAI is the flexible helper that lets a one-person shop look bigger than it is—freeing founders to focus on revenue while the algorithm drafts blogs, answers FAQs, or writes contracts. That time dividend links back to the No. 1 operational challenge we saw earlier: clock management. It also hints at the next frontier for growth-minded solos, who can now scale knowledge work before they ever add a W-2.

Conclusion

Solopreneurs play a central role in today’s small business landscape. They are deliberate in their choice to work independently, often prioritizing flexibility, autonomy, and sustainability. Many generate economic impact beyond themselves by hiring contractors and adopting tools that extend their reach. With low startup costs and strong early profitability, solopreneurship continues to prove itself as a viable and rewarding path.

Methodology

These findings are based on a survey of 1,011 new-business owners using Gusto’s platform. The businesses were identified as having joined Gusto as a new business in 2024, and respondents were solicited across individuals who were identified to be the “Owner” or “Founder” of the business. Respondents confirmed at the beginning of the survey that their businesses were created in 2024. Respondents were asked to complete the survey via email from February 3 – February 21, 2025. Solopreneurs identified as having no W-2 employees. Reported responses were weighted to match the industry distribution across the universe of businesses created in 2024 based on the Census Bureau’s Business Formation Statistics.