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Sole_Proprietorships

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									Sole Proprietorships



          What are the advantages and
           disadvantages of a sole
           proprietorship?
Sole Proprietorships

   A sole proprietorship is a business owned
    and controlled by one person.
   This is the oldest, simplest, and most
    common type of business organization.
   What do you think would be an advantage of
    owning a business by yourself?
    Disadvantage?
Sole Proprietorships

   Financial resources available to one person
    are often limited – so sole proprietorships
    tend to be businesses that only require a
    small amount of capital.
   Examples include lawyers, plumbers,
    carpenters, hairstylists, florists, and farmers.
Sole Proprietorship Advantages

1.   Easy start up
        The business requires small amounts of capital
         and involve few legal considerations.
        Sole proprietors must observe zoning laws
         which specify the areas of a city or county
         where various types of business activities can
         be pursued.
        A city and state business license may be
         required.
Sole Proprietorship Advantages

2.   Control
        Sole proprietors can act quickly to correct
         problems or take advantage of opportunities.
        Control tends to lead to personal satisfaction –
         a successful business is more rewarding.
Sole Proprietorship Advantages

3.   Profit
        The owner keeps all of the profits.
        Often the main reason for starting the business.
Sole Proprietorship Disadvantages

1.   Unlimited liability
        Sole proprietors are personally responsible for
         all business debt – AKA liability.
Sole Proprietorship Disadvantages

2.   Sole responsibility
        The owner is responsible for all aspects of
         running the business.
        Demands on your time and energy may create
         frustration and reduce your sense of satisfaction
         and accomplishment.
Sole Proprietorship Disadvantages

3.   Limited growth potential
        Sole proprietors generally use savings or
         borrow small amounts of money to begin their
         business.
        Banks may require collateral – anything of value
         that a borrower agrees to give up if he or she is
         not able to repay a loan.
        Must have capital to expand the business.
Sole Proprietorship Disadvantages

4.   Lack of longevity
        Longevity is the length of a firm’s life or the
         length of time the business operates.
        Sole proprietorships depend on the health,
         commitment, and competence of one person –
         so they general have a shorter life span than
         other forms of business organization.
Ticket Out The Door

   Name three challenges facing a sole
    proprietorship.
   Name two legal considerations.
   Name the main advantage for being a sole
    proprietor.

								
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