Independent business

Independent business

An independent business is a business, which is free from outside control.[1] It usually consists of privately owned establishments as opposed to public limited companies, which are owned by investment shares on the stock market. In most cases, the independent businesses usually take the shape of sole proprietorship companies.[2]


  • Characteristics 1
  • Advantages & disadvantages 2
    • Advantages 2.1
    • Disadvantages 2.2
  • Examples 3
  • Finances 4
  • See also 5
  • References 6
  • External links 7


Basic setup is a key characteristic of an independent business, ultimately it is easy to begin a sole proprietorship as the set-up is usually simple, this is so that the business is given time in order to measure its initial success and whether it would work in the future.[3]

A further characteristic of an independent business is the maximised responsibility of the proprietor. If the proprietor cannot pay their business finances, creditors can come after the personal belongings of the proprietor, including their home, properties and family bank accounts.[4]

Advantages & disadvantages


There are sufficient 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 their 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 make changes in terms of products in order to benefit themselves as well as their customers. An example of this could be a better line of products to replace a not so well existing line. Franchise based businesses however don't always have this freedom as there are more people involved in the decision-making process.[8]


Despite the many advantages of an independent business, there are also many disadvantages which must be accepted. These affect both the proprietor as well the customers.

1. Financial risk - The financial sources required to sustain a business can be substantial. Proprietors tent to commit most of their savings or even falling into debt in order to begin. If things don’t go well, the proprietor may face substantial financial loss. Also, there’s no guaranteed income to begin with. There might be times, especially in the first few years, when the business isn’t generating 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 sufficient profit in order to meet the needs of the proprietor as well as the employees. This means being committed to the business at all times in order for it to work. [11]

4. Competition - Independent businesses often face competition with local independents which means having to price agree on items in order to share custom. 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 such as, a landscaper who would generally work solely or employ a small team in order for support and contribution to the business.[13]

Other examples can be such as, a restaurant, a club and fast food establishments. All quite common and of a large scale especially in the UK. Fast food establishments dominate many large cities in the UK and are mainly of sole proprietorship accept for the major chains such as; McDonald's, KFC and Burger King. This however causes issues and conflict as proprietors battle to compete with each other in order to win over local custom. Examples of this can be such as the suburban areas of London, Birmingham and Manchester as well as central areas which contain both a broad variety of different 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


  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

  • American Independent Business Alliance
  • National Federation of Independent Business