ZIMSEC O Level Commerce: Sole Trader Business
- 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