Theory question 102
Business UnitsVictor and Samba have been partners for two years. They have had disagreements throughout the period and Samba requested for a dissolution of the partnership so that he could start a sole proprietorship.
(a) State five problems Samba could face as a sole trader.
(b) State five benefits Samba could enjoy if he remained in the partnership.
Show the model answer
(a) Any five: limited capital; unlimited liability; bears all losses and risks alone; heavy workload; lack of continuity (business may end with his illness or death); limited skills and ideas; difficulty getting large loans; no one to share decisions with.
(b) Any five: more capital from two partners; losses and risks are shared; division of labour and specialisation; combined skills, ideas and experience; better decisions through consultation; easier access to credit; business continues if one partner is absent; continued use of goodwill already built.
Contrast one-owner business with two-owner business.