Cities Whose Business Owners Never Went to College

One of the most common routes to attaining upward mobility in the U.S. is business ownership. According to the U.S. Chamber of Commerce, America is home to more than 33 million small businesses, and more than 5 million applications for new businesses are received every year. These include both individually-operated businesses such as sole proprietorships or single-member LLCs and firms with employees beside the owner. And this path can be quite profitable: business equity represents 34% of Americans’ wealth from nonfinancial assets, and the typical net worth of self-employed families is more than four times higher than for families that are workers.

Many Americans believe that another key ingredient for success is college attainment. Postsecondary education is strongly correlated with better employment outcomes, lower poverty rates, and higher lifetime earnings. However, as college costs have increased in recent decades, the public has become increasingly skeptical about the return on investment of a college degree.

But between the earning potential for business owners and the financial and opportunity costs of college attendance, it’s no surprise to find that more than 7.5 million Americans who own a business never attended college.

Business Owner Educational Attainment Over Time

Amid record-high inflation and tuition, more business owners are forgoing college

Source: Flippa analysis of U.S. Census Bureau’s American Community Survey data | Image Credit: Flippa

College education has become more common in the U.S. population over time, which has in turn led to a decline in the share of business owners opting out of a college education. In 2000, nearly half of all business owners—47.2%—had never attended college, but as of 2022, that figure sits at 41.9%. However, after nearly two decades of declines, this trend is showing signs of slowing or even reversing. College costs have risen by more than half since the year 2000, from $17,376 to $26,903, and many college attendees continue to take on significant debt loads to finance their education. At the same time, record inflation in recent years has further strained Americans’ finances, while high interest rates have increased borrowing costs for student loans. As these trends have converged, it makes sense that more business owners are deciding against a college education.

Changes in Educational Attainment by Industry

The share of business owners who never went to college increased in 7 out of the nation’s 10 largest industries

Source: Flippa analysis of U.S. Census Bureau’s American Community Survey data | Image Credit: Flippa

College credentials are often a requirement in many industries and occupations, which can close off some of the potential options available for non-college educated business owners and make other fields more desirable. Among the nation’s 10 largest industries (measured by number of business owners), the share of owners who never went to college exceeds 50% in all but three: real estate (23.0%), consulting (8.9%), and legal services (5.1%). Furthermore, the proportion of owners who never went to college increased in seven of these 10 largest industries between 2020 and 2022.

While the statistics pertaining to the nation’s largest industries may not be surprising given their nature, what is more interesting is that these trends are also affecting many unsuspecting sectors. For example, between 2020 and 2022 the concentration of non-college educated business owners increased in a number of tech and finance-related fields, such as design services, securities investing, insurance, advertising, and e-commerce.

Geographical Differences in Business Owner Educational Attainment

States located in the broader Appalachian and Ozark regions have the most business owners who never went to college

Source: Flippa analysis of U.S. Census Bureau’s American Community Survey data | Image Credit: Flippa

Business owners without college credentials are also more common in some geographies than in others. The concentration of college-educated business owners in a location tends to correlate with that location’s rates of educational attainment overall. Many of the states with the highest share of non-college business owners are found in parts of the country where fewer people go to college in general. For example, more than half of all business owners in Arkansas (51.6%) forwent college, and the state has the third-lowest rate of college attainment. Similar trends hold for other states in the Appalachian and Ozark regions, including Louisiana, Oklahoma, West Virginia, and Mississippi. In contrast, more educated states tend to have fewer business owners without college experience, led by Colorado where less than one-third (32.8%) of business owners did not attend college.

At the metro level, cities in these regions like Oklahoma City (49.6%), Tulsa (44.4%), and Memphis (43.4%) also tend to have higher shares of business owners who didn’t attend college. But business owners’ rates of college attendance can also vary across metros within regions. For example, the San Francisco metro—known for its high-paying tech industry—has one of the lowest shares of business owners who never went to college, while other California metros including Riverside and Fresno have among the highest.

Below is a complete breakdown of the areas with the most business owners who never went to college across over 240 metros and all 50 states. The analysis was conducted by researchers at Flippa, a global online marketplace to buy and sell online businesses and digital assets, using data from the U.S. Census Bureau. For more information on calculations and methods, refer to the methodology section below.

Large Metros With the Most Business Owners Who Never Went to College

Midsize Metros With the Most Business Owners Who Never Went to College

Small Metros With the Most Business Owners Who Never Went to College

States With the Most Business Owners Who Never Went to College

Methodology

To find the locations with the most business owners who never went to college, researchers at Flippa analyzed the latest data from the U.S. Census Bureau’s 2022 American Community Survey. The researchers ranked metros according to the share of self-employed workers who completed high school or lower. To improve relevance, only business owners with positive income and metropolitan areas with sufficient self-employment populations were included in the analysis.

References

1. The State of Small Business Now. (2023, April 10). U.S. Chamber of Commerce. Retrieved January 15, 2024, from https://www.uschamber.com/small-business/state-of-small-business-now
2. Headd, B. (2021, August). Small Business Facts: The Importance of Business Ownership to Wealth. Small Business Administration. Retrieved January 15, 2024, from https://advocacy.sba.gov/wp-content/uploads/2021/08/Small-Business-Facts-Business-Owner-Wealth.pdf
3. How does a college degree improve graduates’ employment and earnings potential? (n.d.). The Association of Public and Land-grant Universities. Retrieved January 15, 2024, from https://www.aplu.org/our-work/4-policy-and-advocacy/publicuvalues/employment-earnings/
4. ​​Edge Research & HCM Strategists. (2022, September 28). Where Are the Students? Bill & Melinda Gates Foundation. Retrieved January 15, 2024, from https://usprogram.gatesfoundation.org/news-and-insights/articles/gates-foundation-probes-college-enrollment-decline
5. Dorn, E., Dua, A., & Law, J. (2020, April). The rising toll of student debt: More than graduates can sustain? McKinsey & Company. Retrieved January 15, 2024, from https://www.mckinsey.com/industries/education/our-insights/the-rising-toll-of-student-debt-more-than-graduates-can-sustain
6. 2022, Educational Attainment, annual: Bachelor’s degree or higher by state | FRED | St. Louis Fed. (n.d.). Retrieved January 15, 2024, from https://fred.stlouisfed.org/release/tables?eid=391444&rid=330
7. American Community Survey 1-Year Estimates [Data set]. (2022). U.S. Census Bureau. Retrieved January 15, 2024, from  https://www.census.gov/data/developers/data-sets/acs-1year.html

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