SOLE-PROPRIETORSHIP - TYPES AND FEATURES OF BUSINESS ORGANIZATIONS;

Definition
Sole-proprietorship may be defined as a form of a business unit set up, controlled and managed by one person with the sole objective of maximizing profit. The sole proprietor or owner of the business is personally responsible for everything done by the organization. Sole-proprietorship is the oldest form of business organization with thousands of people operating it.
The sole proprietorship is the simplest business form under which one can operate a business. The sole proprietorship is not a legal entity. It simply refers to a person who owns the business and is personally responsible for its debts.

This type of business can also be described as a one-man firm. The examples include: shop-keepers, traders, small manufacturers, services of the professionals such as economists, accountants, doctors etc.

Features of Sole-proprietorship

1. Capital: it is the owner of the enterprise that provides the capital which is often described as the risk capital.
2. Ownership: it is a one man firm, i.e., it is owned and controlled by just one individual
3. Liability: the type of liability of sole-proprietor is unlimited liability.
4. Objective: profit maximization is the sole objective of setting up the business
5. Legal entity: there is no separation between the owners and the business. Thus, there is no legal entity.
6. Life span: this depends on the owner; the company can be closed down any time.

Getting to know the features of sole –proprietorship better

1. Capital
2. Ownership
3. Liability
4. Objective
5. Legal entity
6. Life span

Advantages of Sole-proprietorship

Below are 11 advantages of sole proprietorship

1. Establishment: Setting up Sole-proprietorship is very easy as it requires little capital
2. Capital: It does not require a huge sum of money to establish
3. Decision-making: Since it is a one man firm, making decision is easy and fast.
4. Supervision: The sole-proprietor does the supervision by himself
5. Business environment: No special environment is required for operation
6. Planning: The planning of the business and policy formulations are undertaken by the owner.
7. Privacy: The owner is able to keep his business affairs to himself.
8. Customer-friendly: Since most time it is one-on-one type of business, this make Sole-proprietorship a customer-friendly.
9. Good employee relationship: The employees are personally known and relate on individual basis with the sole-proprietor which goes a very long way to boost the morale of the workers
10. Management: It is very easy to manage because of its small size
11. Personal rewards: He enjoys personal reward as a result of energy initiation

Getting to know the Advantages of Sole-proprietorship better

1. Establishment
2. Capital
3. Decision-making
4. Supervision
5. Business environment
6. Planning
7. Privacy
8. Customer-friendly:
9. Good employee relationship
10. Management
11. Personal rewards

Disadvantages of Sole-proprietorship

1. Inadequate capital: Sole-proprietorship does not require a lot of money for its establishment and this creates the problem of inadequate funds for the day to day running of the enterprise
2. Problem continuity: the death or disability of the owner of the enterprise might mean the end of the business, mostly when there is no responsible successor.
3. Risk bearing: the risk of operating this type of business is borne solely by the owner, if it succeeds he enjoys it, if it fails he also suffers it.
4. Unlimited liability: Sole-proprietorship is a type of business that has unlimited liability. In event of closure of the company, the owner may be required to sell his properties to pay his creditors
5. Limited ideas: the Sole-proprietorship only relies on his own ideas, even when he does the wrong thing, he might still believe that is right.
6. Expansion: expansion of this type of business is greatly limited
7. Profit: The profit margin is very small
8. Choice is limited: a wide range of choice of commodities cannot be offered customers due to the size of the firm
9. Changes: the business may suffer stagnation.
10. Separate legal entity: the firm does not have a separate legal entity

Getting to know the disadvantages of sole – proprietorship better

1. Inadequate capital
2. Problem continuity
3. Risk bearing
4. Unlimited liability
5. Limited ideas
6. Expansion
7. Profit
8. Choice is limited
9. Changes
10. Separate legal entity