Entrepreneurship Development

ENTREPRENEURSHIP DEVELOPMENT FOR RURAL FAMILIES 4(1+3)

Lesson 7 : Types of Enterprises

Sole proprietorship

It is a form of enterprise in which an individual invests his own capital, uses his own skills and intelligence in the management of his affairs.

An individual is solely responsible for the results of his operations. This type of enterprise is also known as “individual enterprise”. It is the oldest and simplest form of enterprise. He enjoys full control overall the affairs of the firm.

Features:

1. Entrepreneur has sole ownership of his enterprise. So, he enjoys all rights and authorities.
2. It has one man control. Individual is solely responsible for the profit or loss.
3. The entrepreneur has unlimited responsibility.
4. Procedural formalities are simple to establish the enterprise.
5. He starts his enterprise with either his own savings or with the funds or borrowed
6. It has limited life cycle, as on death of owner it may be wounded up

Advantages:

• Easy and simple formation
• Smooth management
• Promptness in decision making
• Personal touch with customers/workers
• Complete secrecy about important matters.
• Very limited legal formalities.

Disadvantages:

• Limited financial resources
• Limited management ability
• Unlimited liability
• Lack of continuity.