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Asked a question 2 years ago

What are the advantages and disadvantages of proprietary firms?

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Advantages:- 

  1. Control: In proprietary firms, owner has full access to the business as he is the single person handling everything. Owner has the full authority on how to plan, organize and manage all the activities of the organisation.
  2. Fulfillment of customer's needs: Owner is operating on a small scale, so he is able to provide better treatment to its customers by attending them personally and knowing their needs and wants.
  3. Formation: There is no mainimum and maximum limit to the persons needed to start a proprietary firm. It can be started by a single person.
  4. Quick decision making: Owner is responsible for all the decisions taken and also identify the opportunities available so that he can further find the solutions. Decision making power is in the hands of the owner as he is the single person in the firm.

Disadvantages :-

1. Limited resources: As the owner is the single person , fund raising is limited .

2. No legal status: Business exists due the proprieter , so if anything happens to him, business will come to and end.

3. Unlimited liability: Owner's liability is unlimited, as he is the one who takes more risks in order to earn more profits and expand the business.