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Advantages and Disadvantages of Sole Proprietorship Essay Example

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Advantages and Disadvantages of Sole Proprietorship

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Advantages and Disadvantages of Sole Proprietorship. Her decisions regarding store design, layout, display, product range, catalogues and quality, pricing strategies including sales discounts and other incentives, marketing and advertising campaigns, management / administration within her showroom, after sales services and other key decisions. Indeed, she could be influenced in taking above mentioned decisions if she is involved in partnership with her friends or peers. Another benefit of choosing this option is that she will enjoy 100% profits earned from furniture sales. Since, she has personal interest in designing, she could easily design products that are demanded by potential customers and that fulfill their tastes and preferences. Lastly, Kate could easily shut down her business in case she analyses that the probability she would reap profits is low compared to chances of incurring monetary losses.

However, one of the most important disadvantages of 100% ownership is that she would be responsible for all the losses in case she failed to entice customers towards her products because of any reasons such as poor management, higher prices, use of low quality wood and furniture products, weaknesses in designing etc. In short, the owner at one extreme has unlimited liability while on the other extreme has an opportunity to enjoy 100% profits. Another demerit of choosing this option is that she may face problems in management, decision making and problem solving during business operations in absence of any reliable partner who will also have some money at stake if she goes for partnership or setting up a company. Perhaps, if she has the skills of handling her business operations alone then her chances of success will be higher.The first major advantage of Partnership is that Kate would receive additional funds from interested partners that could be utilised in further present investments in furniture showroom as well as could be saved for future expansion if her business grows. The second merit of choosing this option is that she could receive advices, suggestions or recommendations during decision making and problem solving that in turn will enhance internal efficiency, effectiveness and performance. In addition, partners will also use their personal skills and abilities besides using their social networks and contacts for advertising and marketing their furniture products. This will be quite helpful in ensuring growth and success as more partners will be involved in marketing the products. Advantages and Disadvantages of Sole Proprietorship.

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