Is Sole-Trade Proprietorship a Good Option to Start With?
“The responsibility of a sole trader is boundless. His personal belongings can also be dished out for meeting business expenses arising out of failures. ”
It’s not a good thing to start something with a negative stance but one has to do so in order to get hold of all the loopholes. So, I start my discussion with a negative point.The biggest drawback that sole-proprietorship entails is the limited resources that are available to a sole-proprietor. Mostly, a sole-proprietor starts his venture from his family source only. Naturally, there is a limit to what one person can spend. So, he strives to raise funding from monetary bodies and these institutions yearn for security for such purposes.
A sole trader cannot offer much as security and so emerges as a looser in such bargains. His capability for growing the business is limited for want of resources, even where there is ample possibility of spreading out. One person cannot be a specialist in each and every role as a businessman.
He is not able to dedicate adequate time for all sorts of actions and has to depend heavily on loyal and often highly paid employees. The employees may not be interested in the venture to the extent that the proprietor himself is. But he cannot do much in this matter because the managing competence of a single proprietor is limited.
In the current cutthroat business world, intricacies of managerial jobs are increasing day by day. The exclusive proprietor may not be able to use the services of the professionals because of the restrictions imposed by his scant resources.
On the other side, his limited resources make it very difficult for him to exist in the presence of large professional groups. As the responsibility of sole trader is boundless, his personal belongings can also be dished out for meeting business expenses arising out of failures.
Such a scenario hampers his already limited capacity to a large extent. The shutting down of the business also creates nuisance for the customers and hence his social reputation also receives tremendous bashing.
What is more, the extended continuation of sole trade is doubtful and so the assistants also have to suffer tremendous psychological strain. In case they get a better opportunity, they normally don’t hesitate to leave their master in the lurch.
A sole trader cannot come up with the money for incentives and other such methods to retain his experienced work force. In fact, this is a major source of botheration for sole-proprietors in developing economies where there is a lot of struggle for a decent standard of living.
Author - DeeKay
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