11 Advantages of Sole Proprietorship are listed and explicated in this article and we hope you find it informative and helpful for your research.
Sole proprietorship is a form of business that is owned and managed by one person called the ‘Proprietor’ usually for the primary aim of making a profit. There are a lot of advantages of sole proprietorship and we will look intensively at them in this article.
Read Also: Disadvantages of Sole Proprietorship
Advantages of Sole Proprietorship
Below are Advantages of Sole Proprietorship:
1. It involves small capital
The sole proprietorship often needs very little capital to set up depending on the type of business involved but compared to other forms of business, the sole proprietorship is the easiest to start with the smallest of the amount.
Read Also: What Customers Really Want from a Business
2. It is easy to establish
The sole proprietorship is easy to establish because of the small capital requirement and it usually does not involve so much protocol or procedures when setting up the business compared to others like the partnership where forms need to be filled and other protocols observed.
3. Taking of quick decisions
Quick decisions are easily taken by the sole proprietor alone without the consent of other workers in the organization. This makes the management process swift as decisions are talking earnestly.
4. It is easy to manage
The sole proprietor can easily manage the operations of the enterprise without expert management from outside majorly because it is small or he built it from scratch.
5. It needs a small operation
The sole proprietorship serves some fragmented markets in West Africa and as such, large operations would not be necessary since exports are not involved.
6. All profits belong to the owner
All the profits gotten from the business venture belong to the owner of the business because the capital outlay or provision, as well as other necessities for the business, came from him.
7. It can thrive in all business environment
Because of the nature of the operation, the sole proprietor can thrive in almost all business environments, be it rural or urban environments because it is very simple to establish and usually does not require any special protocol.
8. There is privacy in conducting business affairs
Sole proprietorship businesses are often not published and The sole proprietor keeps his business matters secret. He is not required to publish his account or submit an audited balance sheet to the Registrar of Companies.
9. There is a close relationship between owner and employee
Being one of the best advantages of a sole proprietorship, every member of staff of the company is known directly or indirectly by the boss himself and he regulates their affairs the way he likes for his business to succeed adequately.
There is a close relationship between the owner and customers: The close relationship between the owner and customers allows the boss or proprietor to give special attention to the customers at his will.
Also, he can easily find out the special requirements of customers and satisfy them adequately compared to large organizations where consumers have to fill a form that may not even get to the CEOs.
10. The sole proprietor enjoys personal rewards
He chooses his payday, commission, and allowances at will without the interference of any party, he is the ultimate in the business and has the final say in the affairs of the business.
11. There is an effective planning
The sole proprietor embarks on effective planning and creates policies all by himself and these will guide him in the adequate running of the enterprise by way of taking prompt business advantages, for example; in sales and purchases.
Sole proprietors are quite independent, they are not monitored (unless of course if they are in a line of business that is jointly monitored like pharmacy), they can decide to open or close up their business doors at any time. These are some of the very many pluses of a sole proprietorship.