Average Age of Small Business Owners

When discussing successful startup stories, most of you will resemble Bill Gates, Mark Zuckerberg, Jeff Bezos, and Steve Jobs, and how they took a leap of faith at a young age and built the world’s biggest businesses. Bill Gates and Paul Allen founded Microsoft when they were just 20 and 22, while Steve Jobs was 21 when he founded Apple. Mark Zuckerberg co-founded Facebook at 19, while Jeff Bezos founded Amazon at 30.

Owing to these successful startup founders, it’s widely believed that entrepreneurship is a young man’s game. However, a new study by Harvard Business Review suggests otherwise. Based on the confidential datasets by the U.S. Census Bureau, the average age range of a small business owner is 45.

Another report by Esperian found that the average age of entrepreneurs in the construction industry is 48, while it is 54 in the financial, insurance, and real estate sectors.

In this blog, let’s delve deeper into small business ownership statistics, generational trends, and the factors influencing age distribution. To understand the broader landscape, explore key Small business statistics that reveal how these enterprises are shaping economies across the globe.

Why Age Matters in Small Business Ownership?

Age is just a number, even for small business owners. There’s no right or wrong age to start a small business. Warren Buffett started investing before turning 12, but made 99.7% of his wealth after turning 52. He was worth $67 million at 47 and now stands at $153 billion at 94! So, if you think there’s an age limit for starting small businesses and turning them into empires, think again.

The truth is, wisdom comes with age. Studies suggest that most successful small business owners are older. While younger entrepreneurs bring in fresh perspectives, have a deeper understanding of the latest trends and technological advancements, and are high on physical energy and enthusiasm, older small business owners are more experienced and have a profound sense of business operations and navigating challenges.

Unlike younger entrepreneurs, older business owners will likely have more access to investment capital and a wider network of established contacts. Because of their experience, they are comparatively wiser and tend to be less flustered when challenging situations arise. Since they have dealt with similar conditions, they know their strengths and weaknesses and take a calculative approach, weighing potential setbacks and rewards for the business’s benefit. These generational differences are clearly reflected in recent Entrepreneurial Statistics that highlight trends in age, success rates, and funding access.

Also, older small business owners are 62% more likely to receive non-government aid and have a 20-46% higher chance of getting approved for government aid, which includes unemployment insurance, PPP loans, and other forms of state/federal financial assistance. Yet, a Score survey suggests that 52.3% prefer personal finances, including retirement savings, general savings, and credit cards, to those of younger business owners.

Current Age Demographics of Small Business Owners

According to the U.S. Small Business Administration (SBA), 33.3 million businesses qualify as small businesses, employing over 61.6 million people—45.9% of the U.S. workforce. This figure highlights small businesses’ dominance and shows their fundamental role in providing jobs and maintaining economic stability. Let’s review some critical small business ownership statistics to gain insights into competitors.

Generation Breakdown

• According to Guidant Financial, Gen X owns 47% of small businesses, millennials own 13%, and boomers the remaining 40%.
• 43.4% of small businesses are female-owned, suggesting a rise in female entrepreneurship.
• Racial minorities own 20.4% of small businesses, while Hispanics own 14.5%
• 76.2% of small business owners are white, 4.7% are Latino, 5.2% are Black/African-American, and 4.8% are Asian-American.
• 6.1% of small businesses are veteran-owned

Average Age of New Business Owners

• As per SBA, 50.9% of small business owners are between the ages of 50 and 88
• 15.9% of small business owners fall below the 35-year age bracket
• 33.2% of owners running small businesses are aged between 35 and 49.

Key Data and Statistics

• According to the U.S. Census, more than 3,589,500 small businesses are black-owned.
• Black-owned small businesses generated $217.3 billion in sales
• Baby boomers privately own 41% of small businesses and franchises
• 73% of baby boomers are men, while 27% are women
• According to Forbes, small businesses have generated 13 million new jobs in the past 25 years.
• Most small business owners paid employees 16% more than the annual mean wage.
• 82% of small business owners have a satisfactory work-life balance
• The MBDA report suggests that minority-owned small businesses employ 9.4 million people and generate $1.78 trillion in gross receipts, with $184,123 average annual revenue per firm.
• Inc.’s survey suggests that a 50-year-old small business owner has 2.2x the chances of creating a successful business as a 30-year-old entrepreneur.
• 20% of small businesses fail in the first year, 30% in the second, and 50% of businesses cease operations by the fifth year.
• 38% of failed small businesses cite exhaustion of cash reserves, while 42% cite lack of market demand for closure.
• 56.9% of small business owners have a dedicated in-house team for marketing, while 15.3% handle marketing efforts themselves.
• 4 of 10 small businesses have women owners who are foreign-born.

Generational Trends and Their Impact on Entrepreneurship

Entrepreneurship is the cornerstone of economic growth. However, with changing entrepreneurs’ preferences and ever-evolving challenges, each generation has to take unique approaches to start and manage their small businesses.

• Gen Z: Driven by a strong desire for independence and making a difference, Gen Z leverages technology and experiments with different business models to protect their small businesses from traditional barriers and contribute towards social and environmental causes.
• Millennials: Millennials embrace different technologies and have diverse entrepreneurial motivations to push the boundaries of digital commerce. Unlike Gen Z, they are more deterred by societal pressures and career expectations.
• Gen X and Baby Boomers: Both generations have shaped the entrepreneurial landscape. However, changing societal norms, rapid tech shifts, and globalization have affected their entrepreneurial dreams, reflecting their transition in the fast-changing business landscape.

Female entrepreneurship has also undergone a transformative journey and has evolved with time. Although there is diversity and more support for promoting underrepresented groups today, networking and capital issues persist. Generation Alpha is a digital native, highly conscious of the social and economic problems driven by entrepreneurship to break traditional business boundaries and improve global connectivity.

Factors Influencing the Age Distribution of Small Business Owners

Future Impact of Age Trends

The future of small businesses lies with both young and older entrepreneurs. Young business owners should leverage technological advancements, build stronger connections, seek mentorship opportunities, and focus on continuous learning to stay ahead of the competition. Experienced professionals should utilize their industry knowledge and expertise to make informed decisions and leverage professional connections to form partnerships. Furthermore, they should focus on creating innovative solutions to mitigate risks in small businesses and ensure sustainable growth.

Conclusion

Owning a small business is more about staying invested in the idea, being willing to grow, and exercising responsibility. Entrepreneurs in their 20s and 30s can be successful small business owners with the right decisions and strategies, but business owners in their 40s and 50s have distinct advantages. So, it’s not just about the age of business owners but how they treat their ventures. For more such informative content, hit the subscribe button.

FAQs

What is the best age to start a business?

There’s no best age to start a small business of your choice. However, the average age is 45, when experienced people can leverage their expertise to build a successful venture.

How does technology impact younger small business owners?

Technology impacts small businesses in multiple ways:

• Streamlines operations with automation
• Expands their market reach and improves online connectivity
• Improves customer engagement 
• Helps with data-driven decision making

Are younger generations becoming small business owners?

Yes, younger generations are inclining towards owning small businesses to pursue their passion projects, gain financial independence, and enjoy flexibility.

Does the average age of small business owners influence access to funding?

Yes, it can. Studies suggest that older entrepreneurs have established credit histories, monetary access, a deeper understanding of risk factors and funding sources, and experience making strategic decisions. 

How can small businesses overcome age-related challenges?

Small businesses can conquer age-related barriers through intergenerational mentoring, training, and support, using intuitive business tools, addressing financial challenges, adapting to changing marketing conditions, and building an inclusive work environment.