Page 38 - Bisiness Studies

Business Studies for Secondary Schools

Features of a sole proprietorship business belong to the owner. Thus, in
Some of important features that one needs case of loss, the business assets, along
to understand about sole proprietorships with the personal possessions of the

are explained as follows: sole proprietor, can be used to settle the
business debts.
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Single owner: Sole proprietorship
business is owned and often operated Start-up capital: In this type of business
by one person. In some cases, a sole the capital is often contributed or raised
proprietor may hire trusted employees or by the owner and is usually small.
family members. However, the overall Mostly, the main sources of capital are
control and decision-making rests with from personal savings, funds from family
the owner. and friends, and loans from microfi nance
institutions.
Flexibility: Sole proprietorship is the
most fl exible form of business ownership. Stability: Stability and continuity of the
The owner can easily change the location, sole proprietorship signifi cantly depend

product type, design or increase the variety upon the capacity, competence, experience,
of products depending on the customers’ and life span of the proprietor. If the sole
needs. Moreover, depending on the proprietor is competent and committed
available market, one may even choose to enough to the business, the business will
change the type of business. For instance, most likely expand and grow.
a sole proprietor may change from selling
ice cream to opening a bakery or from a
restaurant to a stationery shop. Exercise 3.1

No profi t and loss sharing: A sole proprietor 1. Anita wishes to use her personal
incurs all the benefi ts and risks associated funds to open a business, but she
with the business. The sole proprietor does is not sure if the funds will be
not share the profi t or loss gained in the suffi cient. Advice Anita on a form of
business with anyone else. This means that business that requires a small amount
the sole proprietor enjoys the profi t from of money and explain why.
the business and in case of any loss, the 2. Badu owns a business in which

sole proprietor is responsible. he enjoys the profit and takes
responsibility in case of loss.
Unlimited liability: There is no legal Describe the features of the business
separation between the owner and the owned by Badu.
business. Assets and liabilities of the

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