The basic form of business organisation in the private sector is the sole trader, where one person invests capital in a business and is solely responsible for its effective utilisation. In addition to the incentive of working for personal gain there is the attraction of being in sole control of the enterprise, with the right to take all business decisions. There are, however, some obvious disadvantages to this form of organisation. Successful trading often requires the exercise of a wide range of skills, both technical and commercial, which are often beyond the compass of one person. Many intelligent and creative technical people have failed in business because of their inability to promote the sales of the product, or due to financial mismanagement. Although it may be possible to engage employees with the requisite skills, it is often difficult to retain them on a salaried basis. The size and nature of the enterprise is limited by the amount of capital amassed by the owner, and his borrowing capacity. Enterprises requiring large-scale financial investment cannot usually be carried on by a sole trader. This is a serious consideration, as progress, in a material sense, often depends upon the willingness of industry to invest large sums in the research and development of new products, for a market which may not yet exist.
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