What is sole proprietorship as a form of business

THE SOLE PROPRIETORSHIP – This is the easiest and smallest form of business organization. It is a small company or firm owned and managed by one person – the sole owner/proprietor.


1. The sole proprietorship has no boss. Therefore, the owner is his own boss.

2.  Quick Decision making : This is made possible because he does not consult an external body before making decisions.
3.  He can easily adjust to changing business trend.
4.  Self-interest : A sole proprietor is out to make profit therefore work hard for more profit.  In other business set, this incentive might not be taken on a serious note.
5.  It is easy to set up, organize and maintain as initial capital requirements is relatively low.
6.  The sole proprietor can combine one or more business at the the same time example trading and farming.
7.  The relationship between the sole proprietor and his worker and customers is always very cordial and personal.
8.  There is secrecy and privacy in the one man business as his account is not subjected to public scrutiny.
9.  The demand for certain commodities can only be possible with the establishment of small scale industries.
10.  In most cases, raw materials do not inhibit production hence the sole owner can obtain his raw materials locally.


1. He doesn’t get easy access to sufficient capital.

2. The death of the owner ends the business since his children may not be able to carry out the business effectively.
3.   Division of labour is not effectively practiced in a one man business,  thus throwing away its numerous advantages.
4. Small volume of production is usually the case, since large scale production is not possible due to the small nature of the initial capital investment. 
5.  The privilege of limited liability is not enjoyed by the sole trader. If the business fails, he might sell his personal property in other to settle debts.
6. He cannot employ well trained staff such as Accountant, Engineers, Architects etc who can manage the business effectively. All these can not create rooms for rapid and progressive development. 

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