Business studies chapter 4

Teacher recommended

?
  • Created by: Anusha5
  • Created on: 22-02-16 08:22

sole trader

Advantages

  • Flexible - The entrepreneur can choose their working hours and for how long they want to work.
  • It is quick and easy to set up a business; not a lot of start-up capital is required.
  • Very easy to control and more control over business generally; the entrepreneur does not have to consult anyone before taking decisions.
  • The owner keeps all the profit.

Disadvantages

  • It is hard to earn profit so one may have to work extremely hard before they can be successful.
  • May be very hard to earn finances and expand the business.
  • The business usually remains small, making it harder to compete with larger firms in the same industry. The business may never benefit from economies of scale.
  • The owner may lack the necessary skills of running a business.
  • The trader has *unlimited liability* for the business's debts.

Evaluation

Given it's convenience, it is no surprise that sole traders are the most common types of business organization. However, it also involves a lot of risk for the owner since the legal identities of the business and owners are not separate, and so the owner has unlimited liability for the business.

Comments

No comments have yet been made

Similar Business Studies resources:

See all Business Studies resources »See all chapter 4 sole trader advantages and disadvantages resources »