Independent business

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An independent business is a business that is free from outside control.[1] It usually means a privately owned establishment, as opposed to a publicly limited company, which is owned by investment shares traded in the stock market. In many cases, independent businesses are sole proprietorship companies.[2]


Basic setup is a key characteristic of an independent business. Setting up a sole proprietorship generally simpler than setting up a corporation. This gives the business time to measure initial success and decide whether the business model can scale up to a corporation and perhaps, eventually, a public company.[3]

A further characteristic of an independent business is the maximized responsibility of the proprietor. If the proprietor cannot pay business expenses, creditors may come after the proprietor's personal assets—including their home, properties, and family bank accounts.[4]

Advantages and disadvantages[edit]


There are significant advantages to being an independent business owner in comparison to operating a franchise. Such advantages are:

1. Financial control - With a smaller business such as an independent, finances can be managed easier due to smaller operations and less employees.[5]

2. Better customer relations - When operating a smaller business, customer relations become more valuable and sustain as the customer is the one who is primarily keeping the business alive, it is critical as an independent that the customer relations are of good volume.[6]

3. Decision making - Decision making can be made easier in smaller operations as there is less pressure as opposed to a larger company-based business. With closer employee relations as well as customer relations, independents can make easier and faster decisions to benefit all. [7]

4. Product change - An independent business can change terms of products to benefit themselves and customers. For example, the business could switch to a better line of products. Franchise-based businesses don't always have this freedom, as there are many more people involved in such a decision.[8]


Despite the many advantages of an independent business, there are also disadvantages that affect both proprietor and customers.

1. Financial risk – The financial sources required to sustain a business can be substantial. Proprietors tend to commit most of their savings, or even fall into debt to begin the business. If things don’t go well, the proprietor may face substantial financial loss. Also, there is no guaranteed income at the beginning. There might be times, especially in the first few years, when the business does not generate enough profit for the proprietor to live on.[9]

2. Less control over employees – While employees are able to direct the overall outcome of the work, the proprietor has control over how to complete the task, including the tools and processes used. You must be willing to give up this control, something some of us business owners have trouble doing, because failing to do so may mean the IRS re-classifies your worker as an employee and imposes penalties. [10]

3. High commitment – When owning an independent business, it can take time for the business to become fully established, and for it to make a profit sufficient to meet the needs of the proprietor and employees. The owner must be committed to the business for it to work. [11]

4. Competition – Independent businesses often face competition with local independents, which means having to price agree on items to share customers. Sometimes however, custom can be taken from one independent to another due to substantial price changes, the quality of products and also customer service.[12]


An example of an independent business is a landscaper who generally works solo or employs a small team.[13]

Other examples could include a restaurant, a club, and a fast food establishment. All are quite common and of a large scale especially in the United Kingdom. Fast food establishments dominate many large cities in the UK and are mainly of sole proprietorship except for the major chains such as McDonald's, KFC and Burger King. However, this causes issues and conflict, as proprietors battle to compete with each other for local customers. Examples of this include suburban areas of London, Birmingham, and Manchester—as well as central areas that contain a broad variety of food cultures.[14]


An independent business and the proprietor are both classed as one. The business itself is not taxed separately-the sole proprietorship income is also the income of the proprietor. The proprietor reports income and/or losses and expenses with by using the profit or loss method. The “bottom-line amount” from the profit or loss method transfers to the businesses personal tax return. It is the responsibility of the proprietor to withhold and pay all income taxes, including self-employment and estimated taxes. [15]

See also[edit]


  1. ^ "What’s an Independent?". The 350 Project. Retrieved 29 October 2014. 
  2. ^ Masters, Terry. "The 5 Main Characteristics of Proprietorship". AzCentral. Retrieved 25 October 2014. 
  3. ^ Terry, Masters. "The 5 Main Characteristics of Proprietorship". Azcentral. Retrieved 24 October 2014. 
  4. ^ Maxwell, G. "Sole Proprietorship". 
  5. ^ Mitchell, Stacy. "Independent Businesses Deliver Bigger Economic Benefit, Study Finds". Institute for Local Self-Reliance. Institute for Local Self-Reliance. Retrieved 23 October 2014. 
  6. ^ Trapp, Roger (5 June 2007). "How Customer Relationship Management systems can be of benefit to your business". The Independent. Retrieved 19 October 2014. 
  7. ^ "The pros and cons of independent business ownership and franchises". Guidant Financial. Guidant Financial. Retrieved 12 October 2014. 
  8. ^ Kroeker, Curtis (5 June 2013). "Independent Business or Franchise? How to Decide". Inc. Retrieved 29 October 2014. 
  9. ^ Collins, Karen. "5.4 Advantages and Disadvantages of Business Ownership". Exploring Business. v. 1.0. Retrieved 18 October 2014. 
  10. ^ Johnson, Gavin. "An Objective Discussion About the Advantages and Disadvantages of Hiring an Independent Contractor". The iVLG blog. the iVLG blog. Retrieved 20 October 2014. 
  11. ^ "Starting a new business advantages and disadvantages". SMEToolkit. SMEToolkit. Retrieved 21 October 2014. 
  12. ^ "Advantages and Disadvantages of Independent Reps". BusinessTown. BusinessTown. Retrieved 27 October 2014. 
  13. ^ Johnson, Rose. "10 Examples of Sole Proprietors". Chron. Retrieved 26 October 2014. 
  14. ^ "Fast Food in the United Kingdom". Euromonitor International. Retrieved 28 October 2014. 
  15. ^ "Sole proprietorship". Retrieved 25 October 2014. 

External links[edit]