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What are the advantages and disadvantages of a sole trader business model?

Advantages:
-Easy to set up- no legal formalities
-Owner has complete control-not answerable to anyone else
-Owner keeps all profits
-Able to choose times and patterns of working
-Able to establish close personal relationships with staff and customers
-The business can be based on the interests and skills of the owner-rather than working as an employee for a larger firm

Disadvantages:
-Unlimited liability-all owner’s assets are potentially at risk
-Often faces intense competition from bigger firms
-Owner is unable to specialise in areas of the business that are most interesting-is responsible for all aspects of management
-Difficult to raise additional capital
-Long hours often necessary to make business pay
-Lack of continuity-as the business does not have separate legal status, when the owner dies the business ends too

Carlota O. GCSE Business Studies tutor, IB Computing tutor, IB Maths ...

11 months ago

Answered by Carlota, an IB Business Studies tutor with MyTutor


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Carla C.

Degree: International Management (Bachelors) - Warwick University

Subjects offered: Business Studies, Spanish+ 1 more

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Degree: Law (Bachelors) - Durham University

Subjects offered: Business Studies, English Language

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Carlota O.

Degree: Computer Science (Bachelors) - University College London University

Subjects offered: Business Studies, Physics+ 2 more

Business Studies
Physics
Maths
Computing

“About meI am a Computer Science student at University College London. I have a passion for math and sciences and I look forward to help out with any of these areas.In high school, I completed the International Baccalaureate programm...”

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