A sole trader or a sole proprietor is one
in which an individual introduces his own capital and uses his own skills and
knowledge in the management of its affairs. He is solely responsible for the
results of its operations. Sole proprietorships are common in retailing,
farming, hairdressing etc.
Advantages
v It
is cheaper and easy to set up
v It
is flexible as decisions are taken personally
v The
owner is his own boss. He has complete control over his business
v It
can provide personal services to customers
v There
are no complicated legal requirements
v The
owner gets all the profit
Disadvantages
v The
owner is personally liable for the debts of the business
v It
has limited amount of capital
v It
can not apply division of labour and specialization, nor does it enjoy
economies of scale
v It
lacks continuity
v It
enjoys limited managerial ability
v Its
losses can not be shared
