FORM BUSINESS ORGANIZATION: SOLE PROPRIETOR-MEANING, FEATURES, SOURCES OF CAPITAL, ADVANTAGES AND DISADVANTAGES- BY INSTURCTOR EUNICE OKOYE.
MEANING OF SOLE PROPRIETOR: A sole trader/proprietorship is a form of business organization that is owned, managed and controlled by one person for the purpose of making profit. It is the most common form of business organization.
FEATURES OF A SOLE PROPRIETOR: It has the following features:
It is owned, managed and controlled by an individual.
It is easy to set up because it involves small capital.
It doesn’t take time to take decision since it is owned by one person.
The owner has personal contact with customers.
It has unlimited liabilities.
The purpose of setting it up is to make profit.
SOURCES OF CAPITAL OF A SOLE TRADER: The capital is got through the following:
It can be got from personal saving of an individual.
Capital can got from friends and families.
It can be loan from bank.
Loan can be secured from government.
ADVANTAGES OF A SOLE PROPRIETOR: Some of the advantages are as follow:
It is easy to run since one can begin with small capital.
Decision can be taken as quick as possible.
He/she has the freedom to run two or more types of business together without affecting the business.
The profit is shared alone by the proprietor.
He/she controls the business alone.
DISADVANTAGES OF SOLE PROPRITEOR: The following are some of the disadvantages of a sole proprietor.
A sole trader bears all the risk involved in the business.
In case of any loss at the end, he pays by using his personal property.
A wrong decision can be taken sometimes.
If a sole trader dies, it may be the end of the business.
A sole trader has no closing hour or time to rest.