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Survival of Sole Proprietorship

Despite its disadvantages, sole tradership form of organization is very popular. According to W.R. Basset, “The one man control is the best in the world if that one man is big enough to manage everything.” Sole tradership facilitates one man control which leads to various advantages like simplicity, ease of formation, flexibility, quick decision making and personal touch with customers. But it should also be remembered that one man control also created certain limitations particularly relating to finance and management. These limitations keep the scale of business operations very small as compared to partnership firms and joint stock companies.

The sole tradership concern sinks and swims with its proprietor. The proprietor, who manages everything related to the business, may not have complete knowledge and skills which are required for the efficient performance of the business. His ill health will also have an adverse effect on the working of the business. Thus, on many occasions, the business operations are beyond the capacity of one individual. He has to take the help of other people who can share business risks and contribute capital and managerial skills for running the enterprise.

The sole tradership form of organization is highly suitable in the following cases:

(a)    Small business requiring modest capital and limited managerial talent as in case of retail stores.

(b)    In those lines of business where there is a need for greater personal attention to customers as in tailoring, professional services like medicine and legal.

(c)    In those lines of business where the demand of products is often influenced y seasonal trends and fashions.

(d)    In the production of unstandardised goods like embroidery or artistic things.

(e)    Where the individual has certain skills with the help of which he wants to earn his livelihood independently.

(f)    For catering to the demands of local market like perishable products, laundries, stores and confectionaries.

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