Solopreneurs Thrive with Strong Salaries and Staying Power

Key findings

• The average solopreneur’s revenue increases an average of 15% annually the first five years in business. Solopreneurs earn more than $290,000 in average revenue in their first year, and more than $500,000 by year five.

• Millennial solopreneurs see 25% annual revenue growth and end year five with average revenues of $525,000. This is despite year one revenues smaller than businesses started by Gen X or Baby Boomer solopreneurs.

• Starting in the third year, solopreneurs make more than $80,000 per year. Average solopreneur gross pay increases 15% between business years two and five.

• Solopreneurs make less than employees in their first year, but by year five they make 25% more than similarly skilled employees. Solopreneurs are able to take advantage of the fact that their business earns more by having higher gross pay.

• Solopreneurs who elect S-corp status consistently pay themselves more. S-corp owners report higher payroll earnings, though it’s unclear whether higher income drives structure or vice versa.

Introduction

Despite being more than 80% of all small businesses, owner-only businesses (solopreneurs) are often overlooked in conversations about work, wages, and entrepreneurship. But millions of Americans are choosing to build businesses of one, and they’re making it work.

This report follows those business owners through their first five years. It looks at who they are, how their businesses grow, what they pay themselves, and how their outcomes compare to traditional employment. What we find challenges the idea that solopreneurship is just a stopgap or side hustle. For many, it’s a durable, viable career path. It’s one with real economic impact and long-term upside.

Who are solopreneurs

Solopreneurs make up the backbone of the American small business economy. Of the nearly 35 million small businesses in the U.S., more than 80% are “non-employer” businesses. This means they’re run by a single owner without a formal staff. Most solopreneurs aren’t gig workers or hobbyists. They’re running companies. They populate Main Street, provide critical community services, and drive innovation throughout the economy.

Solopreneurs are everywhere in the economy, but they’re most concentrated in white-collar industries. In 2023, more than 43% of solopreneurs worked in professional services, real estate, or administrative support, sectors where contracting and consulting work is common. Many of these businesses serve larger businesses as on-demand experts, and some build robust client rosters of their own. Others, especially in real estate, operate lean businesses with heavy reliance on contractors rather than employees.

But solopreneurship isn’t just for office workers. Nearly 1 in 5 solopreneurs are in hands-on fields like construction and transportation. These include general contractors who manage projects solo, as well as delivery drivers and logistics entrepreneurs who operate directly through retail partnerships or digital platforms. These businesses are often rooted in local demand and scaled through hustle, not headcount.

Solopreneurs are defined as businesses without any W-2 employees, but that doesn’t mean they’re going alone. Nearly ⅓ of businesses started last year without employees have already hired contractors. These businesses are able to be nimble and quickly add paid help in order to quickly respond to more business, but without the long-term commitment of employees.

Nearly ⅔ of all solopreneurs are in their prime working age, and 42% are 35-54

Most solopreneurs are in their prime working years. In 2023, nearly two-thirds were between the ages of 25 and 54, and the largest single age group was 35–44. These are experienced workers with enough time in the labor force to hone their skills, build networks, and strike out on their own.

56% of solopreneurs are men, but racial demographics suggest parity with overall U.S. population

Solopreneurs span all backgrounds, but are slightly more likely to be men: 56% of solopreneurs are male, and 44% are female. Racially, solopreneurs look similar to the overall U.S. population. About 61% are white, 17% Hispanic, 14% Black, and 10% Asian American or Pacific Islander.

This demographic parity suggests that solopreneurship is broadly accessible, and may offer an entry point to income and independence when traditional jobs fall short.

Solopreneurs are building growing businesses

Solopreneurs are often overlooked in conversations about small business growth. But they make up more than four out of every five small businesses in the U.S., and their economic contributions are significant. One in eleven working adults earns income through a solopreneur business, and those businesses are growing quickly.

In their first year, the average solopreneur business earns more than $290,000 in business revenue. By year five, that figure rises to over $500,000. These aren’t side hustles. They’re dynamic businesses that expand as solopreneurs build reputations, deepen relationships, and increase capacity.

Solopreneur revenue grows by an average of 15% per year in the first five years

We find that solopreneurs grow revenue by an average of 15% each year for their first five years. That growth holds even after accounting for characteristics like industry, location, and owner demographics. 

This means annual business revenue climbs from about $294,000 in the first year to over $500,000 in the fifth year. 

Professional services industries see the largest revenue growth

While the average solopreneur grows revenue by 15% annually, some industries see far faster growth. In particular, solopreneurs in the information sector, which are often software developers or tech consultants, grow revenue by more than 50% per year. These businesses start with average first-year revenue around $130,000 and exceed $700,000 by year five.

Other professional service industries also show strong annual growth. Solopreneurs in real estate or consulting fields (like legal or accounting services) average 10% or more. Meanwhile, arts, entertainment, and recreation businesses, which are often event organizers who coordinate the work of many small businesses, see average annual revenue increases of nearly 30%.

Even slower-growing industries often begin at higher levels. Despite growing at a relatively modest 5% annually, wholesale trade solopreneurs, for example, average more than $800,000 in revenue in year one and surpass $1 million by year five. Growth rates vary widely by sector, but across the board, solopreneur businesses that survive five years tend to grow steadily over time.

On average, millennial solopreneurs have 25% annual revenue growth, and end the first five years of business with the highest average revenue

Millennial solopreneurs see the largest revenue gains of any generation. They start with about one-third less revenue than Baby Boomer or Gen X solopreneurs, but by year five they’ve overtaken both, ending with the highest average revenue.

Year to year growth for Millennial solopreneurs suggest that they’re looking to build businesses that will exist for years to come. The oldest people in Generation X and youngest Baby Boomers are in their early 60s in 2025, meaning that these generations are approaching the end of their career. The oldest Millennial, meanwhile, is 45 years old and still has two decades of work in front of them. As they launch their business, they’re looking for opportunities to grow while building a customer base. Paired with their relatively lower wages compared to older generations shown below, millennials appear to be building long-term businesses.

The typical solopreneur makes about $80,000 per year starting in the third year in business

We track gross pay among a sample of nearly 24,000 solopreneurs, including many for whom we don’t have full revenue data. In their first year, the average solopreneur pays themselves about $41,000. That figure climbs 84% in year two, to $76,000, and continues to rise to more than $87,000 by year five.

Lower pay in the first year is typical, and reflects the early uncertainty of business ownership. New solopreneurs must find customers, establish pricing, and build a consistent book of business all before taking home a steady salary. Many hold back on payroll to manage cash flow and reduce personal risk while the business stabilizes.

At the same time, research shows that people often build up personal savings in the year leading up to a business launch. These reserves give solopreneurs financial breathing room early on, allowing them to draw less from payroll while investing in long-term growth.

As solopreneurs increase their pay through the first three years, that growth slows from years three to five. Even as business revenues continue to climb, many solopreneurs choose not to increase their regular payroll at the same pace. For some, this reflects a cautious approach to income, keeping cash in the business to reinvest. Many of these businesses represent two things for solopreneurs: a source of income and a source of wealth. By investing in their business these owners are looking for opportunities to build long-term value and provide for their customers. Analysis of the subsample of businesses for which we have revenue documents this: for every $100 in increased annual revenue we see only a $2 increase in gross pay to the solopreneur.

Solopreneurs in most industries make $50,000 or less starting off, but see steady increase as their business matures

While the average solopreneur pays themself just over $41,000 in the first year, there is quite a bit of variation across industries. Solo retailers pay themselves about $21,600 while management consultants pay themselves more than $61,000. 

No matter the starting point, solopreneurs tend to see consistent gains as their business matures and establishes itself. Over time, much of the initial risk associated with striking out on your own begins to fade. This increased confidence allows the solopreneur to take immediate advantage of their business’s development and increase their regular gross income. 

Baby Boomer and Gen X  solopreneurs have the highest starting salaries. Millennials and Gen Z see average annual increases of 31% and 58%, respectively.

Baby Boomers and Gen X solopreneurs pay themselves the most in the initial year of a business, but the average Millennial solopreneurs increase their year one salaries by 150% by year two. This shows increased trust in the business as they increase revenues.

Gen Z solopreneurs start even lower, with average first-year pay under $10,000. But by year five, their average earnings exceed $60,000. These entrepreneurs are still early in their careers, the oldest members of Gen Z turn 28 in 2025, and many appear to launch businesses while still working for someone else, rather than relying entirely on income from their new venture.

Solopreneurs quickly outpace employees in gross pay

In their first year, solopreneurs earn about one-third less than similarly skilled employees, even after accounting for industry, experience, and location. Their businesses may earn strong revenue, averaging $294,000 in year one, but solopreneurs typically pay themselves only about $41,000. During this time, high-earning solopreneurs may be drawing from savings built up as they were preparing to launch their business.

That shifts quickly. By year two, the average solopreneur earns $75,000, compared to about $65,000 for full-time employees with similar tenure. This pay premium grows over time. From year two to year five, solopreneurs increase their earnings by 15%, while employees see just a 5% increase over the same period, from $65,000 to $69,000.

Traditional employees often see slow wage growth as responsibilities evolve incrementally. Solopreneurs, on the other hand, capture more of the value they create. As their business succeeds, they have more flexibility to increase their own pay.

Solopreneurs see increased wages compared to employees, but the path looks different by generation

In the first year of business, solopreneurs earn less than similarly skilled employees across every generation. The gap is largest for younger workers. Millennial solopreneurs earn about 60% less than their employee peers, and Gen Z solopreneurs earn almost 75% less. These gaps narrow over time, and by year five solopreneurs in every generation are earning more than employees.

Some of these differences reflect age and career stage. Younger workers are often hired into junior roles and may be paid above their immediate productivity to encourage long term retention. Solopreneurs don’t get that ramp, they have to prove their value to customers from day one. Gen Z solopreneurs only make an average income of about $10,000 in their first year, meaning that some of the sharply negative wage premium for solopreneurs may be the result of the youngest solopreneurs launching their business while working for someone else or other outside sources of income.

By year five, the payoff is clear. Baby Boomers, Gen X, and Gen Z solopreneurs all earn at least 25% more than their employee counterparts. Millennial solopreneurs have a premium of only 6%, despite running businesses with the strongest revenue growth and average revenues well over $500,000. It suggests that Millennials are holding back on payroll to reinvest in growth. While older solopreneurs may be extracting value quickly as they approach the end of their careers, Millennials are building companies meant to last and generate wealth and income for many years.

Owners of S-corps consistently pay themselves more than solopreneurs with different tax and legal organization

Solopreneurs choose different legal structures when starting their businesses. Some operate as sole proprietors or partnerships. Others elect to be taxed as S-corporations (S-corps), a status that offers certain tax advantages but requires more formal reporting and compliance.

Gusto’s data shows that solopreneurs who organize as S-corps consistently pay themselves more than other solopreneurs. It’s not clear whether higher incomes lead to S-corp status, or whether S-corp status enables higher gross pay. But the pattern is consistent: S-corp owners report higher payroll earnings on average.

One reason may be that S-corp owners tend to treat their business as a long-term, income-generating asset — and compensate themselves accordingly. Others may use S-corp status strategically to reduce tax burdens on distributions beyond payroll.

Conclusion

More than 30 million workers in the U.S. economy are solopreneurs. They’re by far the most common small businesses. These businesses are small by design, but they’re growing, paying well, and building long-term value for their owners.

This report shows that solopreneurs don’t just earn a living, they’re building something durable. Over time, they outpace traditional employees in both revenue and pay. And while their paths vary by industry, age, and structure, the signal is clear: for those who choose it, solopreneurship is a viable and often rewarding career path.

Methodology

We define solopreneurs as businesses that never report more than one employee in any month on Gusto. To focus on sustained business activity, we limit the sample to businesses that remained active for at least five years. Solopreneurs must have paid themselves in at least 75% of the months they were on Gusto, indicating consistent business engagement. Because not all solopreneurs rely on regular payroll, we tested an alternate definition requiring pay in at least 50% of months. Results were materially unchanged. The final sample includes nearly 25,000 businesses. All dollar values are inflation-adjusted to January 2025 dollars. Averages are estimated using panel ordinary least squares (OLS).

Revenue analysis is based on a subsample of approximately 5,000 solopreneurs for whom the research team had access to monthly revenue and expense data.

To calculate the solopreneur pay premium, we compare gross pay to that of full-time employees at firms with at least three employees in every month they appear on Gusto. Full-time employees are defined as those working at least 130 hours per month, which exceeds the 30-hour weekly threshold commonly used for health coverage eligibility. We validated our findings using the national average of 34.5 hours per week and observed similar results.