Page 39 - Bisiness Studies

undertake relatively few transactions and
Activity 3.3 have full control over their business.

Based on Juliana’s tailoring business Small start-up capital:Sole proprietorships
scenario in Activity 3.1 analyse and may require a small amount of capital for
FOR ONLINE READING ONLY
state whether you would advise her to start-up. For example, someone setting up
continue operating as a sole proprietor. a vitumbua business only requires buying
cooking ingredients, a cooking pot and a
cooker. The size of capital attracts people
Advantages of a sole proprietorship
There are advantages of operating as a to start this form of business.
sole proprietorship. The following are Direct relations with customers: Since
some of those advantages: most sole proprietors have close contact

with their customers, they are able to
Easy to form a business: Sole proprietorship serve and satisfy customers’ needs.
is quick and easy to establish as the They can receive orders from customers
decision for set up depends on one person. and learn their taste and preferences.
Moreover, it requires minimal initial capital Sole proprietors can provide customers
and adheres to few regulatory restrictions. personal attention and handle their
complaints and thus, they can easily make
Quick decision making: A sole proprietor efforts to retain them.
has the fi nal say in all decisions regarding
the business operations. When a single Enjoys all the business profi t: Sole
person makes decisions for the business proprietors enjoy all the benefi ts
there are few unnecessary delays in taking associated with the business. They do
actions. Hence, sole proprietorships can not share the profi t with anybody else.
fast track business operations. This means sole proprietors keep all the
business profi t.

Independence in decision making: The
sole proprietor is free to make decisions Disadvantages of a sole proprietorship
independently without the interference of The following are the disadvantages of
others. For example, a sole proprietor can sole proprietorship:
make any business transactions without
seeking approval from anyone else. Unlimited liability: If the business
suffers loss, the personal property of the
sole proprietor may be sold to meet the
Easy to supervise: It is easy to supervise liability if the business assets are not
a sole proprietorship because owners enough to clear it. This may affect the
usually have close and direct contact success of the business because it is not
with customers and employees. They legally separated from the owner.

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