It is very easy to form and manage a sole proprietorship. The paperwork required for registration is minimal, the initial capital outlay is small and you keep all the profits accrued. However, you are individually liable for debts that you owe your creditors and for any actions that do not adhere to the laid down rules and regulations. Your creditors will take you to court for any bankruptcy proceedings rather than your business entity. Legally, your business is the same as you.
For your business to grow, you will need to do a lot of research on new trends and emerging market opportunities. This will make your customers rate you positively and they will feel comfortable while doing business with you. However, these endeavors will definitely require the need for you to inject more capital, which you may not have. Banks will only trust you with their money if you show them that your business has shown positive growth for at least three to four years.
Many people fail to keep proper financial records for their businesses once they set them up and they are fully operational. They do not have control over their spending and do not file receipts and invoices. This could easily spell doom for your business enterprise. A sole proprietorship structure should strife to keep the financial history through filing records of the transactions. This will help identify where you made mistakes and which actions were a success.
Running a small business entity can be very challenging since, you make decisions alone, no one questions your actions, and you shoulder the losses alone. As you can see, the responsibilities are huge and you are bound to give up sometimes, calling for the involvement of a business mentor to encourage you as you face these challenges. Alternatively, you could consider hiring a business partner who would help with the operating capital and with whom you can make decisions with.