Gusto recently released a report on solo entrepreneurs in conjunction with its launch of Gusto Solo, a platform that helps solopreneurs “navigate S-Corp status, unlock financial advantages, and simplify compliance.”
According to the report, solopreneurs are thriving. Some key findings:
- There are about 30 million solopreneurs, accounting for over 80% of all small businesses in the U.S.
- Things start slow—in their first year in business, solopreneurs make less than employees, but by year five, they make 25% more than similarly skilled employees.
- Starting in their third year or being in business, solopreneurs make over $80,000 per year. The average solopreneur’s gross pay increases 15% between business years two and five.
- Millennial solopreneurs are leading the way, boasting 25% annual revenue growth, and by the end of their fifth year in business, they have average revenues of $525,000.
Who are solopreneurs
Solo businesses are run by a single owner without any W-2 employees. But almost one-third of companies started last year without employees have already hired contractors. According to the report, “Most solopreneurs aren’t gig workers or hobbyists. They’re running companies and driving innovation throughout the economy.
Solopreneurs are primarily concentrated in white-collar industries. Gusto says, “In 2023, more than 43% of solopreneurs worked in professional services, real estate, or administrative support, sectors where contracting and consulting work is common.” But almost 20% are in the construction and transportation industries.
In 2023, nearly two-thirds of solopreneurs were between the ages of 25 and 54, with most between 35 and 44. Gusto says they’re “experienced workers with enough time in the labor force to hone their skills, build networks, and strike out on their own.”
Most (56%) solopreneurs are male; 44% are female.
Fast-growing industries
The report shows that “while the average solopreneur grows revenue by 15% annually, some industries see far faster growth. For instance, “solopreneurs in the information sector (including software developers and tech consultants) see revenue growth of over 50% per year. These businesses typically start with an average first-year revenue of around $130,000 and exceed $700,000 by year five.
Solopreneurs who own businesses in the arts, entertainment, and recreation fields see average annual revenue increases of nearly 30%.
Millennial solopreneurs
Millennial solopreneurs boast 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.”
The growth of millennial solopreneurs suggests they’re in this for the long run. “The oldest millennial is 45 years old and still has two decades of future work. As they launch their businesses, they’re looking for opportunities to grow while building a customer base. Paired with their relatively lower wages compared to older generations, millennials appear to be building long-term businesses.
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.
Building for the future
Gusto says its report “shows solopreneurs don’t just earn a living, they’re building something durable. Over time, they outpace traditional employees in both revenue and pay.”
To help these business owners, Gusto Solo offers numerous tools, including an S-Corp tax savings calculator, a reasonable salary calculator, automated payroll, a compliance hub, and the ability to pay contractors compliantly.
There’s a lot more information in the Gusto solopreneur report. I recommend you check it all out.
Rieva Lesonsky is President of Small Business Currents, LLC, a content company focusing on small businesses and entrepreneurship. You can find her on Twitter @Rieva, Bluesky @Rieva.bsky.social, and LinkedIn. Or email her at Rieva@SmallBusinessCurrents.com.
Photo courtesy Getty Images for Unsplash+
