How to Expand a Sole Proprietary Business Effectively?
“Either a sole-proprietor thinks of adding a partner or considers the option of employing a brilliant manager who may be more than a match for him. ”
The owner of a sole trade business has restricted means and assets and hence his business is likely to remain at an average level only. Since only one person puts in his funds, they possibly are inadequate in one or the other way.Financiers and other funding agencies also know that a single proprietor is not much likely to create wonders (leaving exceptions of course). So, they hesitate in investing hugely in such an enterprise.
A sole-proprietor has to judge and arrive at conclusions solely by himself. No doubt he can take professional help, but important decisions entail many business secrets that can’t be divulged without being detrimental to the health of business.
So, he makes an effort to keep the business only to that level that can easily come under his personal command. When a business is stretched out, the risk of it becoming unmanageable is always there. In the present scenario such a business is at the hit list of the competitors who are always hungry for a takeover by fair or foul means.
But as goes human nature, a sole trader always tries to expand his business despite being cognizant of all the pitfalls. There are two methods that he often takes recourse to. Either he thinks of adding a partner or considers the option of employing a brilliant manager who may be more than a match for him.
When new persons are added as partners, his business becomes a partnership instead of remaining a sole trade company. The new partners bring in resources and skill and this often helps in the extension of business.
As a second recourse persons with high managerial capability are employed. But again they are not given a free hand and the final decision is taken by the proprietor himself.
Such employees also know that they are more capable and hence more likely to reach at correct decisions but they keep their role limited to being only sincere advisers. Otherwise, any untoward repercussion may cost them their job, which is normally accompanied with a hefty salary.
Moreover, when a partner is added the question of sharing of the profits raises its head whereas this is not case when a top-class manager is inducted into the business.
Author - DeeKay
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