Unit 2A

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Unit 2A
GOING SOLO
SOLE TRADER
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Unit 2A
Going Solo
If you start up a business on your own, you are
known as
A Sole Trader
Sole Traders are very common as they are easy
firms to set up.
Examples
Plumber
Hairdresser
Builder
Electrician
Mechanic
Taxi Driver
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Unit 2A
Advantages of being a sole trader
Going Solo

• you can keep all the profits the firm makes

• you can control the way you run the firm

• it is easy to get started all you need is
  capital

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Unit 2A
Going Solo
Disadvantages of being a sole trader

• you may have to work long hours to be successful

• you are responsible for all the losses the firm
  makes

• you may have to sell your personal assets to pay
  off creditors

This means the sole trader has unlimited liability
So if the business goes under, you could lose
your
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Unit 2A
Going Solo
A sole trader needs capital to get started. This
could be

• redundancy money from a previous job

• savings built up over a long period of time

• contributions from family and friends

• a bank loan

This capital is used to purchase the assets
needed to get started
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A Bank Loan
Unit 2A
You can get a bank loan if you present a strong
business plan
Going Solo
This will show the bank if you are able to afford
the repayments.
Banks charge for this service
The charge is called interest
This means the borrower must pay back the sum
borrowed plus the interest charged by the bank.
Example a 20,000 loan over 4 years at 12
interest per annum
20,000 (12 x 4)
20,000 (2,400 x 4)
29,600 4 years
7,400 each year for 4 years
or 617 every month for 4 years
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Unit 2 A
Going Solo
Key Words
Open your key words jotter and copy down the
following
Sole Trader
- a person who owns their own business
Rent
- paid to the owner for use of premises
Costs
- all the payments involved in running a business
Loan

• money borrowed from a bank or person and paid
  back
• usually over a number of years

Interest
- the cost of borrowing on top of the loan itself