Advantages Of One-Man Business
The following are the advantages of the one-man business.
- Personal interest of the owner enhances efficiency.
- Decision taking is quick since the owner does not need to consult anybody.
- He enjoys profits from the business alone.
- The owner enjoys independence since he is his own boss.
- There is personal contact with his employees, so employee's motivation is thus enhanced.
- There is privacy in conducting business affairs because a sole proprietor is not required by law to publicize his accounts.
- Cordial relationship with customers provides a feedback system that can help assist in maximum satisfaction of customers.
- One-man business is suitable for the provision of personal services and production of special or custom-made products.
- The one-man business is easy to set up and organize.
- The sole proprietor can have more than one occupation.
Disadvantages of One-Man Business
The following are the disadvantages of one-man business:
- There is limited capital for expansion purposes. This is partly due to the inability of the owner to borrow money from banks.
- The sole proprietor has unlimited liability as his personal assets can be sold in case of business failure.
- The business is not a separate legal entity, therefore, it cannot sue or be sued.
- Sole proprietor business lacks the certainty of continuity because the death of the owner or poor management can result in the death of the business.
- The sole proprietor is not suitable for the heavy industry, especially where large scale production is required.
- The owner of a sole proprietorship has the disadvantages in the area of specialization because he is involved in too many activities.
- His decision, in most cases, may not be effective because two good heads are better than one.