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Essential QuestionEssential QuestionDefine the term “Sole-Proprietorship” and

explain the three advantages and the four disadvantages of operating a sole proprietorship

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So you want to have a business? So you want to have a business? Questions to answer…Questions to answer…How hard to start?

Start up costs, production costs, Laws or business regulations (Zoning Laws)

How much control/responsibility do you want to have? More control= more responsibility

How will you make profit (and make your profits grow?)

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What is a Sole Proprietorship:What is a Sole Proprietorship:A business that is owned and operated by

one person (You are CEO and Janitor)Oldest, Simplest, and common type of

business organizationUsually businesses are service based and

require little start up capital. EX-plumbers, carpenters, hairstylists, or florists.

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Advantages to a sole proprietorship:Advantages to a sole proprietorship:easy to start up- don’t usually require much

capital or legal considerations full control of the business by the owner- all

business decisions made without consideration for partners or shareholders

exclusive rights to profits by the owner

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Disadvantages to a sole Disadvantages to a sole proprietorship:proprietorship:unlimited liability by the owner- If business goes

into debt, owner must pay all debts even if this means selling off personal prop.

sole responsibility of the owner to operate the business (few day’s off/vacations)

limited growth potential for the business lack of longevity of the firm- if owner gets sick or

dies so does biz.

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