Social Responsibility of a Sole Proprietorship

Every sole proprietorship is an expression of its owner's values and idiosyncrasies. Sole proprietorships are closely held companies, owned by single individuals who can make financial and managerial decisions in any way they please as long as they act legally. A sole proprietor can create a company with a strong emphasis on social responsibility as a reflection of deeply held beliefs. Alternately, a sole proprietor can build a company geared towards nothing but making a profit.

The movie "It's a Wonderful Life" portrays the classic stereotype about business and social responsibility: basic human decency works against successful business practices although it may earn you love and loyalty. Despite the stereotype, social responsibility can be a sound business policy, enabling you to build strong business relationships based on trust and also providing a compelling marketing message. A sole proprietor enjoys unique opportunities to take advantage of the flexibility and freedom of being a closely held business and build a socially responsible company.

For a sole proprietorship, profit is anything that a business earns after subtracting operating expenses from gross revenue. Unlike most corporations, which exist to earn profits for shareholders, sole proprietorships can easily balance profit with values because their owner operators act autonomously. Like every other business, a sole proprietorship must earn a profit over the long term to remain financially viable, but the owner can choose to make investments in socially responsible endeavors rather than automatically maximizing profits.

A sole proprietorship is especially suited for aligning business activities with social responsibility because owner operators inevitably have personal ethical and political affiliations that they can support through their business activities. In addition to having the discretion to choose among social causes, a sole proprietor can also come up with unique approaches to addressing social issues. For example, one sole proprietorship mobile food business in Seattle offers a 50 percent discount to unemployed customers, based on the honor system.

Businesses are rarely able to immediately discern the effects of socially responsible business practices. Building a relationship with a community will certainly generate increased sales over time, but it is tough to objectively measure the precise results of this type of outreach. Evaluating socially responsible business policies necessarily involves subjectivity, judgment calls and decisions that are made for emotional rather than practical reasons. Sole proprietors can make these types of decisions without having to justify their expenditures and actions to other stakeholders.