Advantages And Disadvantages Of One-Man Business

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Advantages Of One-Man Business

The following are the advantages of the one-man business.

1. Personal interest of the owner enhances efficiency.
2. Decision taking is quick since the owner does not need to consult anybody.
3. He enjoys profits from the business alone.
4. The owner enjoys independence since he is his own boss.
5. There is personal contact with his employees, so employee's motivation is thus enhanced.
6. There is privacy in conducting business affairs because a sole proprietor is not required by law to publicize his accounts.
7. Cordial relationship with customers provides a feedback system that can help assist in maximum satisfaction of customers.
8. One-man business is suitable for the provision of personal services and production of special or custom-made products.
9. The one-man business is easy to set up and organize.
10. The sole proprietor can have more than one occupation.

Disadvantages of One-Man Business

The following are the disadvantages of one-man business:

1. There is limited capital for expansion purposes. This is partly due to the inability of the owner to borrow money from banks.
2. The sole proprietor has unlimited liability as his personal assets can be sold in case of business failure.
3. The business is not a separate legal entity, therefore, it cannot sue or be sued.
4. 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.
5. The sole proprietor is not suitable for the heavy industry, especially where large scale production is required.
6. The owner of a sole proprietorship has the disadvantages in the area of specialization because he is involved in too many activities.
7. His decision, in most cases, may not be effective because two good heads are better than one.

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