Page 3 - Lesson Note 3

DEMERITS/DISADVANTAGES:https://www.youtube.com/watch?v=ilglM8U8f

HQ

1. Limited financial resources: Funds are limited to the owner’s personal savings and his
borrowing capacities.
2. Limited managerial ability: sole trade can’t be good in all aspect of business and he can’t
afford to experts also.
3. Unlimited liability: The liability of a sole proprietor is unlimited. His private property can
also be assigned for meeting business obligation.
4. Uncertain life: Death,insolvency, lunacy or illness of proprietor affects the business and
can lead to its closure.
5. Limited scope for expansion: Due to limited capital and managerial skills, it cannot expand
to a large scale.

SUITABILITY OF SOLE TRADERSHIP BUSINESS:

1. Where the personal attention to customer is required as tailoring, beauty parlor.
2. Where good s are unstandardized like jewelry.
3. Where the modest capital and limited managerial skills are required as in caser of retail
store.
4. Business where risk is not extensive i.e. lesser fluctuation in price3 and demand i.e.
stationary shop.

HOME ASSIGNMENT:

Multiple questions---- 1 MARK EACH

1. Sole proprietorship business can be started by:

(a)One person

(b)Two persons

(c) Seven persons

(d) Unlimited

2. The liability of a sole proprietor is:

(a) Limited

(b) Unlimited

(c) Limited to investment, (d) none of the above

3. A sole trader and his business are:

(a) Different entities