Sole proprietorships offer a flexible and convenient structure for small businesses.
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But don't let the simplicity of a sole proprietorship fool you. Sole proprietor businesses are capable of handling complex business strategies and achieving significant growth.
Some of the most recognized names in business actually began as sole proprietorships. Although you wouldn't know it to look at them now, these companies were birthed with a single person at the helm of a small business.
The eBay concept was launched by Pierre Omidyar in response to difficulties his girlfriend encountered when she was trying to sell old Pez dispensers and other collectibles. Omidyar knew there was a huge community of people interested in selling used merchandise, and the Internet seemed like the logical place to bring them together. Using his personal webpage, he started a sole proprietorship with a prototype called Auction Web in 1995. In a short period of time, the company was incorporated and the name changed to eBay. eBay went public in 1998- but just three years earlier, it was a small, sole proprietorship.
Kinkos is a good example of a business that maintained a sole proprietorship business structure throughout its expansion. Like many startup leaders, founder Paul Orfelea opted to launch Kinkos as a sole proprietorship. As his company grew, he preferred to maintain the sole proprietor structure rather than transitioning to a corporate one, forming partnerships with individuals throughout the nation. When the company was sold to a private investment firm, it consisted of 450 different partnerships. Inconvenient? Maybe – but it's proof that you can grow substantially using a sole proprietorship business structure.
Ann Withey (co-creator of Smartfood popcorn) launched Annie's Homegrown to make and sell organic pasta, meals, and snacks. Despite the company's success, she chose to operate it as a sole proprietorship because it gave her the ability to focus on the creative aspects of the company as well as the flexibility to take new products to market quickly. Annie's Homegrown eventually went public in 1998, but their example illustrates the benefits of a sole proprietorship for successful small businesses.