As we are experiencing Covid-19, the global threat has dynamically changed our lives and everything surrounding us.
Obvious enough, this storm of change has thundered the businesses also, owing to it being a concept which came into existence ages ago as the most important medium of mitigating people’s needs and wants.
Maximum businesspersons, especially the ones who own the sole entrepreneurs are suffering gravely due to this sudden change.
Sole proprietorship is a kind of business establishment which is owned by one single individual.
Easy to start, requires minimal initial investment, having full authority and lesser tax burden, are among the plus points of such kinds of businesses which are also the reasons why most businesses are launched under this form of ownership.
Sadly, there are certain disadvantages of sole entrepreneurs which can be unimaginably devastating often.
Those hiccups have already forced a lot of businesses to shut down during the pandemic.
Though such occurrences have taken place earlier also, the frequency of such incidents has increased significantly in the last one and a half years. Let’s take a look at them:
Fundraising issues
Change in business is constant.
Not only when growth is the motive, often some changes also require more investment in order to sustain a business.
As sole proprietorship is a one-man show, the man running the show often fails to raise enough funds to sustain and grow his business.
Common reasons behind this failure include that most owners are not well-off enough to invest when a new unexpected business need arises or raise loans for the business against what they have; they fail to forecast the future needs of the business which results owners into not generating enough capital to meet those needs; mismanagement of resources on account of not being a skilled business leader etc.
Risk of personal loss
This kind of business is subject to unlimited liability which means that the owner of such concern is bound to sacrifice his personal assets even in order to settle liabilities incurred while operating the business.
Due to being unable to cope up with the sudden changes that have popped up during this pandemic situation, a lot of businesses have failed to accrue enough funds that would have solved their liability issues.
As a result, not only a lot of individually owned business entities have been dissolved but the owners have become victims to severe personal or familial financial crises as well.
Managerial inability
Another major drawback of a singly owned business is owner’s managerial ineptness. In this type of business, owner is the manager.
But most owners lack the knowledge on how to apply appropriate management strategies to operate their business efficiently.
Moreover, they usually cannot afford to employ a professional manager to run the business for them.
This lack plays a severe hindrance to the smooth operation, sustainability, growth probability and overall success of a business.
Technological illiteracy
This has become their “nightmare come true!” Many sole entrepreneurs still have no online presence at all.
Those who have the lion’s share among them do not have a noticeable reach to their current and potential customers electronically.
They always find it nearly impossible to accept any change positively and adjust with things accordingly when the change has to do anything with technology.
As a result of this fright of technology and digitalization, a lot of owners are now failing miserably to manage the ongoing change properly and save their entities from dying.
These are the main obstacles to a sole proprietorship’s growth and sustainability which proprietors know about but never expected them to be so destructive.
Maximum closed sole entrepreneurs could have sustained and even prospered through the pandemic had there been enough knowledge, skills and unity present among the proprietors and necessary support from government and other concerned entities provided.
Some possible and effective solutions are suggested below which can be instrumental in solving the discussed problems:
Developing owners’ managerial skills
Sole proprietors must be introduced with comprehensive knowledge on business management in order to run their business profitably.
Here, an important role can be played by the government and the large business organizations that penetrate the market through these businesspersons primarily.
They can design and provide necessary training for owners’ managerial skills development.
With that, training them in order to enhance their knowledge on their specific field of business also will add more flavor in their development as a skilled business manager.
Making proprietors technologically adept
Being technologically adept will allow the owners to open new doors of opportunities by sincerely pursuing which they can elevate their business to new heights of prosperity.
This tech-savviness will not only help them in conducting e-commerce activities smoothly, but it will also allow them to reduce communication expenses, establish firmer control, secure a competitive position in the market and so on.
To be more precise, the more diversely they can incorporate technology into their business ensuring appropriate utilization, the stronger will become the foundation of their business.
Involvement of government and large business organizations is essential in this regard too.
Practicing social responsiveness
Attaining prominence as a socially responsible business will have a very positive impact on both the financial and reputational health of the entity.
People tend to be customers or clients of those businesses, which care for the prosperity of their society. Businesspersons can work on this by identifying those societal needs in their locality which are required to be looked into very seriously and contribute in solving them accordingly.
For example, if a business is situated in a locality where students have very limited access to education above primary level, then the owner of that business can contribute in setting up a secondary level school in that area as an expression of his social responsibility.
Forming cooperative societies
A co-operative society is a democratic association instituted by people to meet their common economic, social and/or cultural goals.
Sole proprietors can form such societies by obeying the Co-operative Societies Act of Bangladesh in order to meet their mutual business goals.
This will allow them to be united and then they can fight through odd situations better.
Such organizations can be formed at any level starting from minimum 20 members in case of primary co-operatives and 10 members in case of central or national co-operatives.
Also, they will be able to accumulate funds in the association which can be provided to members or even outsiders as loans under reasonable conditions.
On one hand, this feature of such organizations will allow members to get financial help reasonably.
On the other hand, such associations can generate additional revenue by providing loans.
Sole entrepreneurs are the businesses which help us the most in fulfilling our needs and wants.
The grocery shops, restaurants, salons, laundries, tailor shops and what not-nearly all of such small and medium enterprises are formed as solely owned entities.
With that, these entities play a vital role in minimizing the unemployment rate of a nation.
Besides, these businesses contribute largely in keeping the local economic activities running and therefore ensuring that the entire economy of a country is alive.
Hence, effective endeavors must be devised soon in order to provide these economically important resources with necessary guidance and facilities in order to safeguard the national economy and well-being of the people from any unendurable threat.
The author is a freelance contributor who is currently pursuing BBA at United International University
