Small Business Succession: Employer vs. Nonemployer Businesses

By SBE Council at 19 June, 2026, 12:05 pm

by Raymond J. Keating -

Even with many challenges, America remains a nation of entrepreneurs. Indeed, based on the latest Census Bureau data, the U.S. has more than 36.8 million firms, with 99.7 percent being small businesses with fewer than 100 employees.

And both employer firms (6.4 million) and nonemployer firms (30.4 million) contribute to economic, income and employment growth.

At the same time, there are obvious differences between businesses with employees and those without any (the lone entrepreneur). Assorted differences, especially the matter of succession, was illustrated in recent poll results from Gallup.

Consider some interesting findings:

● "New Gallup research shows that as employer-business owners think about retirement, most, 74%, have plans to sell or transfer the ownership of their business. These transactions have the potential to enhance their wealth or the wealth of family members. This contrasts sharply with business owners who have no employees, yet account for approximately 30 million businesses. Only 35% of these owners plan to transfer ownership through a sale or gift. Approximately 27% plan to close the business, and 40% say they are uncertain of their plans."

● As for business owners' plans for the next five years, "44% say they would try to grow or expand their business. Another 30% say they would try to maintain its current size and scale; whereas 14% say they would sell, go public, or transfer ownership; 8% say they would close it; and 12% do not have a plan." Gallup also reported that 52.3 percent of U.S. employer-businesses "are owned by people who are at or near retirement age, those 55 and older."

The growth bias here is clear, given that 44% look to grow their business and another 14% would like to sell, go public or transfer ownership.

Also, the divide between employer owners and nonemployer owners is notable and holds across assorted breakdowns, including, for example, that over the next five years, 49 percent of employer owners are looking to grow/expand vs. 42 percent of nonemployer owners, and 13 percent of employer owners would like to sell the business compared to 5 percent of nonemployers.

● Of course, it's important to keep in mind the differences among many employers and nonemployers. Gallup noted:

"When asked why they do not have a plan, the plurality of nonemployer owners (35%) stated that there was no specific reason after being presented with various options. In open-ended responses, some owners who did not endorse a specific reason offered referred to their age or retirement plans as the reason. Others mentioned that the business was based on their personal labor, an artist for example, and so could not be continued when they retire. The next-most-common reason given for why they had no plan was that 'the business is too small' (31%), followed by the owner being too busy to think about the future (18%)."

Finally, there are, of course, implications in these data and trends for the broader economy, particularly regarding the age of a majority of entrepreneurs. Part of the conclusion in the Gallup report notes:

"The median employer's business generated $80,000 in profits in 2023, according to the Gallup data, suggesting a median valuation of somewhere around $400,000 if sold (using a simple and conventional valuation formula). In cases in which owners achieve a successful ownership transition, this value may be sold or transferred to a family member, if plans are realized. The preservation of most employer-businesses, through sales and transfers, would help provide macroeconomic stability as older American entrepreneurs retire, because most Americans work for employer-businesses."

Indeed, entrepreneurship is of vital importance to the American economy, including to American workers, as are policy, cultural and societal matters that provide a sound foundation upon which entrepreneurship can flourish, from starting up new businesses, to being able to operate and grow existing businesses, to investing in businesses, and to, again, being able to sell or transfer businesses.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. He is the author of " The Weekly Economist " book series, and 10 Points from Walt Disney on Entrepreneurship .