What are the circumstances suitable for sole proprietorship business?



It is aptly said that “one man control is the best in the world if that man is big enough to manage everything.” But the man must have the capacity and capability to manage the business properly.

Sole proprietorship business has its own merits and simultaneously suffers from certain imitations as discussed above. In spite of its limitations it is suitable in the following cases:


Low capital investment:

Business which requires low capital investment is suitable under sole proprietorship concerns. Therefore, small-scale units or units which do not involve production on a large-scale can be conveniently carried on under sole proprietorship.

Requirement of personal touch:

Business requiring personal touch and supervision like service sector- transport, advertising etc. are best suited under sole proprietorship. The owner can develop direct contact with the ultimate consumers to market the products.


Involves personal service:

Business engaged in rendering of personal services like solicitors, doctors, architects, chartered accountants etc. are suitable under sole proprietorship. Individually, he can extend all required services to the parties.

Equipped to serve locally:

Business meeting the local requirements by taking advantage of the local raw materials availability can also be conveniently taken up under sole proprietorship.


Quick decisions and Flexible operations:

There are certain business which requires immediate decisions and any delay therein shall be costly. A sole proprietorship business can take advantage of such situations. It also can change its operations from time to time without any difficulty.

Government’s incentives:

In order the boost small entrepreneurs and small and tiny businesses, Government from time to time extend various types of financial and non-financial benefits – subsidies, tax holidays, tax concessions, training, marketing assistance etc. Entrepreneur can avail those benefits.


Cater the need of big business:

Big business houses are based to depend on small- scale units for their operations like cement units for bags, packaging materials, stationery and others. Similarly by-products and waste products are also used by the small units. Entrepreneurs can start their business to cater their needs too.

Hence, household and personal service centres, retail shops, product of artistic nature, which requires personal skill – handicrafts, jewellery, goods of aesthetic value and professional firms are generally operated under sole proprietorship. It continues as a popular form of business in India in spite of the presence of other forms such as partnership, companies and cooperatives. Hence, prospective entrepreneurs may start up their business accordingly.

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