SOLE PROPRIETORSIPS
It is also known as Sole Tradership/ One-
person Business or One - Man Business. In
this type of business one person owns the
business. However, it does not mean that
the owner is the only person who works in
the business. The owner does not have to
work in business at all. However, he or she
and the business are on and the same in
the sense that the business is not a
separate entity from the owner. Types of
this business include small food services,
small farming, and hairdressing etc. When
setting up this type of business, the sole
proprietor should ensure that government
regulations regarding certain types of
businesses are noted and carried through.
The sole proprietorship is the most common
form of business unit. Some reasons for this
are:
❖ Sole proprietorships are most often
small businesses.
❖ They are easy to establish and operate.
❖ Very little capital is needed for starting
up this type of business.
❖ It provides the financial capital needed
❖ Profits and losses are shared.
PARTNERSHIP
A partnership is an association of 2 to 20
partners operating a business for the
common goal of making a profit. The owners
share the responsibility for the running of
the business and any subsequent profit or
losses that may be generated. Partnerships
are not legal entities. Consequently, a
partnership cannot sue or be sued in its own
name; instead, each of the partners must be
named. There are two kinds: ordinary
partnerships and limited partnerships. In
ordinary partnerships, losses are shared
equally, or as agreed by partners. In the
limited partnership, limited partners will
lose only what they have invested. If the
business goes bankrupt, however, unlimited
partners may lose even their personal
assets.
Characteristics of partnerships:
❖ The limited partner cannot take part
in management. He or she has no
power to bind the firm.
❖ Profits are shared equally or as
stated in the Partnership Deed.
❖ Capital is provided by the partners as
agreed.
❖ The retirement or death of one
partner may require the
reorganisation.
 COOPERATIVES
Cooperatives are businesses that are
formed and operated by their members.
The cooperative society must be
registered. Shares are sold to its
constituents, that is, the community that
the society is serving. The principles that
govern cooperatives are listed below:
❖ There is democratic control, that is,
one person one vote.
❖ Membership is open to constituents.
❖ There is limited interest on capital
investments.
❖ The surpluses of cooperative
societies are distributed according
to the shares/purchases of the
members.
❖ They are voluntary, non-profit-
making organisations engaged in
retail or other financial activities.
❖ They are managed and controlled by
their members.
❖ The member s are also the clients.
Two advantages of cooperatives are that
members pool their resources, and the
members are the owners.
Two disadvantages are the membership
may not have the expertise necessary to
build the organisation and decision-making
slow and therefore clients may lose out on
opportunities.
FRANCHISES
In a franchise, the owners/ operator enters
into an agreement with a parent company.
The parent company agrees to the
franchised company selling its products or
services. The franchise must abide by the
guidelines and regulations set out by the
parent company. Usually, the agreement is
set for a period of time. Examples of
franchises are Kentucky Fried Chicken,
Burger King, McDonalds, and Baskin
Robbins Ice Cream, among others.
Advantages:
❖ Helps to alleviate unemployment
❖ Promotes various sectors
❖ Injection of revenue into local
economy
Disadvantages:
❖ May result in a loss of culture
❖ May not be able to compete with
❖ The brand or product can be no
longer valuable
Characteristics of franchise include:
❖ Is licensed by the parent corporation
❖ Pays a fee to the parent corporation
❖ Bears the name of the parent
corporation and enjoys its goodwill
❖ Travellers easily recognize the
franchise because of its logo and the
similarity of its layout and buildings
and so patronize it as they would in
their own countries.
SYNDICATE
A syndicate has the following
characteristics:
❖ It is a type of partnership
❖ It comprises groups of persons/
companies that have come
together to transact financial
business.
❖ The groups may be involved in real
estate insurance underwriting the
selling of stocks or bonds/ or
stockbrokerage.
❖ Members cooperate in sharing the
risks.
Projects form the basis of most of the
operations of this type of business
organization. Two examples of a syndicate
are: 1. When a group of people come
together to try to promote and raise money
for the arts
2. A company that provides news to many
different newspapers and media outlets.
Advantage:
Working relationships are clearly
established. As one project or transaction
is completed, the partners can come
together repeatedly to transact more
business.
Disadvantage:
The narrowness of the operation is often
a disadvantage as each member focuses
only on his/ her area of the operation and
nothing else.