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RESEARCH Scaling to $1 Million: How Small Businesses Fare by Owner Race and Gender

Small businesses rarely scale to $1 million annual revenues, especially those with Black, Hispanic, and/or female owners.

While policymakers often focus on how to scale smaller businesses into larger ones, there is surprisingly little empirical evidence on the process by which these firms scale and grow revenues. Using $1 million annual revenues as a milestone of small business growth, we ask how commonly young firms reach this milestone, how the incidence of this phenomenon varies across industries and owners of different races and genders, and how it relates to firm's initial size. Our findings have implications for understanding small business growth and equitable access to growth opportunities and resources, and suggest opportunities for policymakers in both the public and private sector to address the differential opportunities and barriers to growth these entrepreneurs may face.

Select Findings

  • A small share of small businesses reach $1 million in revenues in the first five years, with the likelihood of reaching that milestone showing a direct relationship to revenues in a firm’s first year.
  • Black-, Hispanic-, and/or female-owned firms were least likely to earn $1 million in revenue within five years of starting business. Industry of operation and lower levels of revenue in the initial year help to explain those differences, though some persist.


Chris Wheat


Stacey Chan

Inclusive Banking Research Lead

Nicholas Tremper

Senior Research Associate