Entrepreneurs make money by building businesses that generate more revenue than they cost to operate. However, entrepreneurs also need to decide how to pay themselves, whether through an owner’s draw, distributions, or dividends.
Understanding both how your business earns money and how you take money out of it can help you manage cash flow, stay compliant with tax requirements, and reinvest in future growth.
This guide explains how entrepreneurs create businesses that make money, the different ways to pay yourself as a business owner, and the key steps to building a profitable business.
What exactly is an entrepreneur?
An entrepreneur is a person who creates or runs their own business, often taking financial or personal risk in the process. Successful entrepreneurs rely on a combination of hard and soft skills, including problem-solving, adaptability, financial management, communication, and leadership.
For many, entrepreneurship is as much a mindset as it is a business venture. The evolution of the creator economy has helped broaden the scope of what it means to be an entrepreneur. Today’s entrepreneurs take many forms: a startup founder, a full-time ceramicist, a jewelry maker selling through their online store, and a TikTok influencer could all fall into this category.
Data shows that entrepreneurs making their first sale on Shopify increased sevenfold between 2018 and 2025, reflecting how more people are turning business ideas into online ventures.
Technology has also made entrepreneurship more accessible. In a Shopify survey, 86% of US entrepreneurs say it is easier to start a business today than it was 10 years ago because of ecommerce platforms. In contrast, about two-thirds say AI tools have lowered barriers for new entrepreneurs.
Entrepreneur vs. business owner
Most entrepreneurs are business owners, but not all business owners are entrepreneurs.
Research distinguishing the two roles points to innovation and growth intent—not risk tolerance or company size—as the defining features of entrepreneurship. An entrepreneur builds new products, services, techniques, or business models with growth as their explicit goal.
A business owner, as defined by the US Small Business Administration, independently owns and operates a company that isn't dominant in its field. The role of a business owner can include actively running daily operations (focusing on the daily operations of their companies, managing resources, and ensuring they continue to make products and provide services that meet customers’ needs) or staying hands-off while managers do.
There is plenty of overlap; many entrepreneurs also own and manage a business they created. However, some business owners buy and operate an existing company without making major changes. In general, entrepreneurship involves more innovation and scalability.
How do entrepreneurs make money?
While every model is different, entrepreneurs earn money in three ways:
Entrepreneurs make money by building and expanding profitable businesses that offer valuable products or services. Shopify research shows that 41% of new online stores launch with a single product, illustrating that many businesses begin with a focused offering before expanding into additional products or revenue streams.
The right approach depends on the type of business, its stage of growth, and your long-term goals.
Here’s how each money-making avenue works:
Business profits
Business profits are the primary source of entrepreneurs’ money. A business earns profit (or net income) when its revenue exceeds its expenses, and its owner can reinvest in growth, build cash reserves, or pay themselves.
Entrepreneurs generate profits in different ways depending on their business model. A retailer might earn revenue by selling physical products online or in stores, while a consultant or designer charges clients for services. Other entrepreneurs sell digital products such as online courses, software, or templates, or generate recurring revenue through subscriptions or memberships.
As long as the business creates value that customers are willing to pay for, it has the potential to generate profits.
Multiple revenue streams
Some entrepreneurs increase their earnings by adding new revenue streams alongside their core business. Diversifying income can reduce reliance on a single product or service, help smooth seasonal fluctuations, and create new growth opportunities.
For example, Epic Gardening originally generated advertising and affiliate income through its blog, YouTube channel, and podcast. But as founder Kevin Espiritu understood the value of his audience, he decided to diversify.
“Why shouldn’t I try, at least, to offer something directly to the audience?” he says on an episode of the Shopify Masters podcast. Today, the business sells products through its ecommerce store and promotes paid memberships that offer gardening tools, expert advice, discounts, and other subscriber benefits.
Equity growth
As a company grows its revenue, profits, customer base, or intellectual property, it may become more valuable to investors or potential buyers. Rather than earning all of their income through a salary or business profits, entrepreneurs can benefit from the appreciation of the business itself.
An entrepreneur doesn't need to sell the entire business to realize that value. Some sell a minority stake to investors, while others eventually sell the business outright or pass ownership to family members or employees. The proceeds from a sale can far exceed the income the owner earned from operating the business year to year.
For example, Joanna Griffiths, founder of underwear brand Knix, sold an 80% stake in her company to Essity for $320 million. She retained 20% to preserve a degree of ownership. “I wanted to stay for as long as I possibly could and hold onto as much ownership as I possibly could,” she says on Shopify Masters. “Partnerships and exits can take a lot of different shapes and forms.”
How to pay yourself as an entrepreneur
An entrepreneur can pay themselves through:
Many entrepreneurs view business ownership as a path to greater financial security. Shopify research found that US entrepreneurs were more than twice as likely to view owning their own business as more secure than holding a traditional job (39% versus 18%).
However, for some entrepreneurs, building that security means reinvesting profits back into the business before paying themselves. For example, Canyon Coffee founders Ally Walsh and Casey Wojtalewicz say on Shopify Masters that they didn’t pay themselves during their first four years in business, instead using revenue to keep the company growing.
Since not all entrepreneurs can afford to forego a salary, here are some ways you can pay yourself as a business owner:
Owner’s draw
This is common for sole proprietorships, partnerships, and limited liability companies (LLCs) taxed as sole proprietorships or partnerships. You withdraw money from your business bank account as cash flow permits. However, you remain responsible for paying estimated income and self-employment taxes and keeping accurate financial records.
Salary
Owners who work for S corporations or C corporations generally receive a regular salary, like an employee. These corporations need to establish a payroll process, and salaries are subject to payroll taxes (Social Security, Medicare, and unemployment). The IRS expects shareholder-employees to receive a reasonable salary based on their responsibilities, experience, industry norms, and time spent working in the business.
Distributions and dividends
Owners of S corps and LLCs taxed as S corps can take distributions, which reduce their equity in the business (since they effectively move capital out of the company to the owner as an individual). Dividends are after-tax profits from a C corporation that are distributed to owners or shareholders, rewarding them for investing in a profitable business.
How entrepreneurs build profitable businesses
These are common steps entrepreneurs follow to build their businesses:
- Find a profitable idea
- Develop and validate your product
- Draft a business plan
- Secure funding
- Launch your new business
- Manage the business
1. Find a profitable idea
The product or service you choose for your business is foundational: it’s one of the most important decisions you will make. Rather than competing in crowded mainstream markets, many entrepreneurs are succeeding by serving specialized or niche audiences.
According to Shopify data, about 55% of platform sales in 2025 came from categories outside the top 100, demonstrating the potential of specialized niches.
The questions below will help you evaluate the merits and drawbacks of your business idea. To answer them, you’ll need to invest in market research to understand the wider landscape and define your target audience.
- Does this product or service serve a passion or solve a problem?
- Is this a growing category, a stable trend, or a fad?
- What is the competitive landscape in the industry?
2. Develop and validate your product
After deciding what you will sell, consider your options for product development. You might make physical products by hand, partner with a manufacturer who can build to your specifications, purchase wholesale products in bulk to resell, or use dropshipping if you don’t want to hold inventory.
The next step is to validate your product idea, confirming there’s interest in and demand for your product. Consider these validation strategies:
- Send online surveys to potential customers
- Build a Coming Soon page
- Create a prototype or minimum viable product (MVP), and conduct user testing
- Set up a pre-order process
- Start a crowdfunding campaign
- Run test marketing campaigns
- Conduct deeper market research, focusing on demand
- Study your competitors’ products and methods
- Run a feasibility study
3. Draft a business plan
Now it’s time to write a business plan, a document that outlines every aspect of your business. It covers core details, including the cost to start the business, funding sources, your target audience, your business model, product pricing, planned product lines, and your marketing strategy.
Your business plan will serve as your company’s road map, helping you execute your carefully formed strategy. This free business plan template can guide you through the process.
4. Secure funding
New businesses often require upfront investment for purchasing inventory, developing a product, or marketing the launch. Common funding options include:
- Self-funding (bootstrapping). Use personal savings or money from family and friends.
- Small business loans. Borrow from a bank or credit union; alternatives such as Small Business Administration (SBA)-backed lenders and nonprofits are also an option.
- Crowdfunding. Raise money from individual backers through platforms like Kickstarter or Indiegogo, often in exchange for products or rewards.
- Angel investors or venture capital. Offer equity in your business for funding from investors, typically in businesses with high growth potential.
The right funding source depends on your financial needs, growth plans, financial risk tolerance, and how much ownership you want to retain. Many entrepreneurs have shared their funding approaches on Shopify Masters.
For instance, By Rosie Jane founder Rosie Jane Johnston says she has continued to bootstrap her fragrance business through the years, prioritizing profitability and retaining full control.
Photography and travel accessories brand Peak Design has raised over $34 million across nearly a dozen Kickstarter campaigns to remain investor-free.
Issues Magazine Shop founder Nicola Hamilton secured startup funding through Futurpreneur, an alternative lending program in Canada that pairs financing with business planning support and a one-year repayment grace period.
5. Launch your new business
Choose your business name and legal structure. If you’re selling online, build your ecommerce store with a platform like Shopify so customers can browse products, place orders, and complete purchases. Create a store launch checklist to plan your opening day.
You can extend your store’s functionality with apps from the Shopify App Store for email marketing, customer support, inventory management, appointment bookings, and other business needs. Then, focus your time and energy on making your first sales.
6. Manage the business
You’ll learn more about running your business by doing the hard work; whether you ever take a business class, successful business owners continuously learn and adapt: A study of 411 new entrepreneurs, published in Frontiers in Psychology, found that entrepreneurs who engaged in more continuous learning ran better-performing firms.
Effectively managing a business includes honing your people-management skills, fostering company culture, assessing and planning for evolving business risks, measuring performance, and recovering from setbacks.
Because entrepreneurs may juggle many responsibilities, Shopify offers tools that can streamline day-to-day management. For example, Shopify Analytics brings sales, customer, and store performance data into one dashboard, while Shopify Flow can automate routine tasks, such as tagging orders, managing fulfillment workflows, or sending internal notifications. Each can help free up time to focus on strategic decisions and business growth.
How do entrepreneurs make money FAQ
How do entrepreneurs pay themselves?
Entrepreneurs can pay themselves in different ways depending on their company and its business structure, including owner’s draws, salaries, distributions, and dividends.
How many hours do entrepreneurs work?
Entrepreneurs can assume they will need to work hard, but the number of hours varies widely. Some small businesses are side gigs worked in the evening hours or on weekends for extra cash, while others are new entrepreneurial ventures that see owners working well over eight hours daily.
How does an entrepreneur create wealth?
Entrepreneurs create wealth by building and scaling businesses that generate profit or increase in value. They benefit from ongoing operations or by selling the business. Smart financial practices, like developing multiple income streams and managing finances effectively, can also help entrepreneurs build wealth.
