Sole Trader. Image credit

Sole Trader. Image credit

ZIMSEC O Level Commerce: Sole Trader Business

Sole Trader


  • Is owned by one person who provides all the capital.
  • Their motive is to make profit.
  • Tends to be small in size.
  • Has few legal formalities.
  • Easy to form as they require little start up capital.
  • Controlled and run on a daily basis by the proprietor himself.
  • Family members may sometimes provide labour.
  • Have unlimited liability.
  • Has flexible opening and closing hours.

Sources of capital

  • Own personal savings.
  • Borrowing from friends and relatives.
  • Loans and overdrafts from commercial banks.
  • Mortgage loans from Building Societies.
  • Retained Earnings.
  • Hire Purchase buying.
  • Leasing of fixed assets.
  • Purchasing goods for resale on credit.
  • Forming a partnership of a private limited company.


  • Requires little start up capital.
  • Has fewer legal formalities.
  • Is easy to run and control.
  • There is close supervision of workers.
  • Operates for longer hours which may increase sales.
  • Offers personal service to customers.
  • There is quick decision making.
  • The business can quickly adapt to changes.
  • The owner enjoys profits alone.
  • Overhead expenses are usually lower.
  • The business affairs can be kept private.
  • Provides employment for the owner.


  • Has unlimited liability.
  • Bears the losses and debts alone.
  • Decision making may be poor since there is no one to consult.
  • There is no room for specialisation.
  • There is limited room for expansion due to limited sources of capital.
  • There is no continuity after the owner dies.
  • Prices of goods are usually high.
  • The trader may be overworked.
  • Cannot borrow money from financial institutions due to lack of collateral.

To access more topics go to the Commerce Notes page

Quick NetOne, Telecel, Africom, And Econet Airtime Recharge

If anything goes wrong, chat with us using the chat feature at the bottom right of this screen