Where an investor decides to be the owner and manager of his own business, he is said to be operating a sole proprietorship. Essentially, a sole proprietorship is a form of business organization that is owned by one person who may also serve as the business manager. Most business organizations in Nigeria are of this type. They include mechanic shops, internet services centers, private medical centres, carpentry shops, law firms, accounting firms etc.
The proliferation of this type of business organization in our society is mainly due to the ease of its formation. In most cases, there is no legal pre-requisite for forming a sole proprietorship, outside the registration of business name. On the other hand, only few persons think of registering their business name.
Apart from the ease of entry, sole proprietorship as a form of business organization is attractive in several other ways including the following:
Pride of Ownership
Ownership of one's business is usually a source of pride and fulfillment to the owner. This is more so where the business is successful. Success in business ownership speaks volumes about the owner's sound vision, industry, and managerial skills. All these are attributes about which the business owner is often justifiably proud.
The sole proprietor is his own boss. He takes all routine and strategic business decisions without any interference from a superior. He is however, constrained by what is lawful and by what society defines as acceptable behaviour.
One major reason for owning a business is to make money. The sole proprietor generates income by operating the business. In the process he incurs some costs and pays taxes. What remains at the end of a period, usually a year, is his profit. Other types of business organizations also make profits but the difference with the sole proprietor is that he keeps all the profits to himself.