Theory question 102
Business UnitsCommerce 2 (essay)
Explain five benefits that would be derived and five losses that would be suffered when a sole trader admits other partners.
Show the model answer
Model answer
Benefits (any five, explained): more capital from the new partners; shared risks and losses; wider skills and experience; division of work/specialisation; easier to get loans; continuity when one partner is absent; more ideas and better decisions; business can expand.
Losses (any five, explained): loss of sole control; profits must be shared; slower decisions; possible disagreements; still unlimited liability, now also for partners' acts; loss of secrecy; partnership may end on death/withdrawal of a partner; difficulty withdrawing his capital.
Explanation
Explain each benefit and each loss in a sentence.