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Sole Trader in Modern Era

Essay by   •  July 22, 2019  •  Essay  •  1,573 Words (7 Pages)  •  381 Views

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  In this modern era, a sole trader is also known as a sole proprietor whereby there is no partner is involved and the business comes into existence when an individual decides to operate a company. All businesses today operate at a rapid pace. This is because doing business have become relatively easier given the ecommerce revolution, the organization have move from becoming a brick and mortar platform to a click and mortar platform which require no physical present. As expected, the majority of small businesses begin their existence as sole proprietorships compared to partnership or so on. First and foremost, an individual needs to register for a license from the government to operate a business as a sole proprietor. As an example, to set up an accountancy firm in Malaysia, you need to be licensed by the Malaysian Institute of Accountants (MIA).

  One of the features of being a sole trader is that George only used £4000 of his own savings and a £1000 bank loan to open up a second-hand book shop and a small cafe in Wales. In other words, all personal assets of the owner can be used to fund the business or the owner can make a bank loan with the approval from the bank, whereby the owner needs to pay back the bank with an interest which the owner and the bank agreed. The owner is also personally liable for all business debts as well. Furthermore, another main feature is that the Margaret Thatcher's Conservative UK government which gave a guaranteed income of £40 per week to unemployed people who set up their own business where they were required to fund their first £1000 out of their own funds, and also come up with a basic business plan. This is where George is qualified for £40 per week from the government’s Enterprise Allowance Scheme. This is because the UK government strongly believes that the Enterprise Allowance Scheme will help to reduce the mass of unemployment and encourage the younger generation to operate a business. This will not only help to reduce the mass of unemployment but to also help the country to boost their economics to a higher level of standard.

  Next, another feature is that the owner has the flexible ability and also the freedom to make any decision in the business. In sole proprietorship, management rests with the proprietor himself. The proprietor is a manager also. Example, George employed two part time students to help him out in the cafe during weekends and school holidays and he also spotted an opportunity to lower down the price to encourage more students to visit the second-hand book shop and the cafe. It is because George has a rational understanding skill and has a high observation skill of the market where he targeted the student market. This is because the majority of the customer comes from the three local colleges which locate nearby the second-hand book shop and cafe. According to Dr. S.S. Khanka’s book, Entrepreneurial Development, where she mentions that William R. Basset opines that “The one man control is the best in the world if that man is big enough to manage everything”.

  As I said nobody is perfect and that’s why we are humans. Although George has the quality and the potential to become a very successful sole trader but there are still some flaws and weaknesses in him. As an entrepreneur, we must always have a strong desire to evolve our company and always focus on businesses which we can experience large profit margin in order to remain relevant and sustainable. This is where George had failed. Although the book shop only made a small contribution to turnover but the main income is still from the cafe. For that reason I think George should focus more on the cafe instead of the secondhand book shop. It’s because as an entrepreneur we must always target for a specific market that brings the business lots of benefit. For example, George can transform the secondhand book shop into a cafe, hire more employees and introduce new and fresh variety of food whereby they can serve more customers during peak hours and provide better customer services. As the owner of the cafe, George should understand the health regulations from the very beginning so that he could avoid any trouble in the future which will interrupt the growth of the business.

  As time goes by, George gained lots of profit but he doesn’t save the money as a backup plan for his business. One of the criteria to become a successful sole trader is that the owner needs to have a backup plan. You need to save some money in case of any emergencies. For example, instead of borrowing loans from the bank or a private loan company George can use his backup cash to solve the cafe’s problems. At the same time George will also have no problem with cash flow. In my opinion, George doesn’t have a vision for the business that he owns. In the business world today, a business without a vision is equivalent to having a Formula One car stuck in a traffic whereby the growth of the business is stationary. As a result, the business doesn’t have any specific direction where it could lead to business failure in the near future. George should come up with a vision for the company because it helps the business to evolve when the unlimited room of creativity and innovative is fully utilize for the business. According to Li Ka Shing, he said that “Broaden your vision and maintain stability while advancing forward. This is my philosophy.”

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