1. Sole proprietor
• Sole proprietor or individual enterprise is one of the oldest
types of business unit.
• In this type of business, a single person undertakes the risks
of production.
• This individual uses his or her own resources or money to set
up the business.
• The individual then hires people to work for him or her and
pays them their wages according to the agreement.
• All the losses or profits are felt by the individual owner. The
individual decides what to do with the profit.
• Some use it while others prefer to re-invest the profit in
another business to generate more income.
2. This type of ownership is advantageous because the owner is
usually self motivated and has every reason to make the
business become as efficient as possible.
The individual owner is in full charge and can devote as much of
his time and energy to the business as he wishes.
The owner has no need to consult or involve anyone when
making a new policy for the business. This allows the owner to
put decisions into effect without having to convince others.
Sole proprietors are usually small and this allows the owner to
have more closer and personal contact with both the employees
and customers.
Advantages of sole proprietor
3. Individuals usually have small amounts of capital and this
might hinder the expansion of the enterprise
The success of the business depends on the owner's
abilities, and on his or her death or retirement, the
business might be affected by the person who inherits it.
If the inheritor is not a good business person, the company
will obviously collapse
Since the individual owner bears all the risks, he or she is
liable for all the debts and losses of the firm.
Disadvantages of the sole proprietor
4. Private company refers to a type of enterprise owned
by shareholders and run by a board of directors and a
manager. Shareholders earn some of the profit but if
the company goes bankrupt, they only lose the
amount they have invested.
Private Companies
5. They have a lot of potential in increasing public
awareness of an issue
The private sector is profit and efficiency driven, and
as such tends to have a highly productive staff
The private sector is demand and client driven and
therefore very responsive to the people's needs
The sector is very flexible compared to others in that
it has to amend its service to fit the public whenever a
need arises
Advantages of private companies or
private sector
6. The private sector tends to invest mostly where
returns or profit is assured
They tend to be owned mostly by expatriates and this
contributes heavily to the country's capital flight.
This is a situation in which a lot of money generated in
the country is sent out to other countries and this
contributes very little to the development of the
country.
Disadvantages of private companies
or private sector
7. Parastatals are state corporations owned by the
government of the country in which they operate.
They are funded by the government and the profits they
make are taken by the state to be used for developmental
purposes.
In Botswana we have parastatals such as Botswana
Railways, Botswana Telecommunications, Air Botswana
and many others.
The government usually advertises for and appoints a
board to run the parastatals
Parastatals
8. They employ many people and thus create
employment in countries with a few private
companies such as Botswana
Parastatals have an advantage of expansion because
they are funded by the government.
Advantages of parastatals
9. They tend to waste state funds if they are not
properly, which is a great cost to taxpayers
They often lead to monopolies whereby the
government owns most of the profitable enterprises
and competes with small companies and this might
lead to the collapse of the small companies.
Disadvantages of parastatals
10. Joint Venture is a form of partnership whereby two or
more individuals or companies agree to do business
for a specific time under clear contract conditions.
We have a number of joint ventures in Botswana
between retail outlets. For example, we used to have
a joint venture between Metro supermarket and
Sefalana supermarkets which was called Metsef
hyper-market.
Profits under joint ventures are shared out according
to the written contract.
Joint ventures
11. They reduce unnecessary competition between
companies selling the same products which allows
them to share the profits and losses
Joint ventures can expand easily and make more
profits because they have a lot of capital
Joint ventures can save money by buying products at
low prices because they buy m bulk
They create a lot of employment by hiring many
people because they have capital.
Advantages of joint ventures.
12. They usually lead to the collapse of small businesses
because they are big and monopolise the market
If the company collapses many people might lose
their jobs because joint ventures usually employ many
people
Disadvantages of joint ventures
13. Co-operatives are enterprises formed by people with a common
goal who bring together some of their resources such as money,
tools, labour and equipment in order to reduce production costs.
Co-operative members can either share the profit amongst the
members or they can reinvest it into other businesses. The co-
operatives can sometimes use their profit for the development
of their community or They can divert it to charitable events with
the agreement of all the members.
Examples of co-operatives in Botswana come in the form of co-
operative supermarkets that are spread throughout the country.
A bigger co-operative can be found in Mogobane village which
runs a poultry, dairy and vegetable farm.
Co-operatives
14. They allow members to have more buying power than
individuals because they are large organisations.
A co-operative can give its members access to
cheaper materials because it buys in larger amounts
or in bulk which allows for discounts.
Advantages of co-operatives
15. Co-operatives in rural areas are usually led by
inexperienced managers and often collapse and lose
a lot of money.
It is often difficult to divide the profits fairly amongst
members of a co-operative because their
contributions are equally important even though they
vary.
Disadvantages of co-operatives
