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1) A Sole Trader
A sole trader is a business that is owned by a single person. It may however have more
than one employee. This is the most common form of ownership in the UK.
There are many advantages of being a sole trader. The main ones are:
As the owner, the sole trader has total control of the business. This is great for a
small business such as my personal fitness business because it means that I can
make decisions quickly and do not have to gain other peoples agreement.
A sole trader is cheap and easy to start up. In order to begin working a sole
trader simply has to open a Bank Account and inform the tax offices about their
existence. This is very attractive as it means there is not a lot of paperwork and
bureaucracy involved and would allow me focus my efforts on getting the
business its first customers as soon as possible.
A sole trade gets to keep all of the profit a very attractive option when you are
just starting out.
Sole traders' business affairs are private and confidential this means that any
rival personal training competitors cannot see what I am earning, and will not be
able to see how my business works and what makes it a success.
There are however disadvantages to being a sole trader:
A sole Trader has unlimited liability this means that the owner is liable for any
debts that the business may incur. For my Personal Training business as the set
up costs are low and I intend to utilise common land for the group training
sessions hopefully my costs should be low initially thus reducing the possibility of
A sole trader can find it difficult to raise finance. As sole traders are small, banks
will often not lend sole traders large amounts of money particularly in the
current difficult economic climate. For a business such as my proposed one with
minimal startup costs this is not a big disadvantage.
It can be difficult to enjoy economies of scale. In my case this means that as a
singleton trainer I am limited in the number of clients I can train and give personal
attention to at any one time.
Business continuity is a problem if the sole trader retires or dies this means
there are issues in relation to what happens to the business going forward. For
my type of business where I am personally undertaking the training sessions
could whoever takes over from me do the same or would they have to bring
additional people in?
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A partnership is where there are two or more owners of the business. A
partnership usually has between two and twenty members (although there are
some examples such as John Lewis where there are hundreds of partners).
The advantages of being a partnership are:
The risks are spread across more people. This means that if the business gets
into difficulty then there are more people who can share the burden of the debt.…read more
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Having limited liability means that each of the investors can only lose the money they
have invested in the company and no more. This helps encourage people to finance the
company / business because they know that they can only lose what they have put in if
the company fails.…read more
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I want to be unique so this is not the way I want to go.
I have decided that I will initially create my business as a sole trader. This is because it
is easy to set up, requires minimal capital, allows me to pay minimal wages (as I will not
employ many staff), I will retain all of the profits and can determine the future direction of
my business myself.…read more