Cause’s of Survival of sole proprietorship Business is Some typical disadvantages are associated with sole proprietorship business. Yet this type of business is prevailing at every nook and corner of the world. Some absolute advantages or unique causes provide the foundation of survival and expansion of the sole proprietorship business. Sole proprietorship are the most common types of business in the United States, accounting for 72 percent of all enterprises. However, corporation account for 72 percent of the profits earned by U,S business (Ranchman)” Though the join proprietorship business enjoy a number of advantages, the sole proprietorship business is also surviving side. Some of the causes of this survival are as follow:
A Combination of Effort and Reward
In the production system, there should be a positive correlation of effort and reward, which is a precondition of motivation for more work and risk-taking. Unlike other organizations, effort and reward are directly related in proprietorship business. Profit and goodwill are also the result of the effort of the proprietor is more active, which is one of the causes of survival of sole proprietorship business in the face tough competition from the giant corporation.Intensive technology as is possible in case of
Intensive technology as is possible in case of joint proprietorship, partnership or company.
A Good Training Field
The proprietor of this type of business managers and control the business, and thus get practical training about the business management, which helps efficient management of the business and offers incentive for survival.
Indirect Effect of Liability
Proprietorship business has no separate entity and the liability of the owner is unlimited his personal property is also liable for business debt. As a result, the proprietor become very vigilant and the of the success is high in case of proprietorship business.
- Inseparable interest and longer Life: Integrated interests of the owner and the business contribute to a longer life of the business.
- Swift Adjustment of Demand and Supply: A proprietorship business can easily adjust its faculties to the varying natural of demands catered by this king of business suitably and not by large scale business.
- Adequacy of Smaller Capital: The amount required in sole proprietorship business is smaller than that required in other type of business. The adequacy of smaller capital to sole proprietorship business is an attribute favoring its survival.
- Individuality and proprietorship Ego: Naturally, man wants unique leadership, individuality and ego in social and business arena. Sole proprietorship business provides.
- Suitability for perishable Products: For perishable product like milk, fish etc. Sole proprietorship business is unique.
- Suitability for Specific Areas: Some businesses require direct contact of the customer and seller where sole proprietorship business is unique.
- Easy Employment Area: Any one can easily start a sole proprietorship business. In the present period of scarce employment, single proprietorship provides employment and, thus grows and survives.
This single proprietorship business has some unique advantages and features that provide bases for its survival and growth.