Reading Time: 6 minutes

 

Ask Yourself

Have you heard about the Stock Markets?
Have you ever felt the need for a better understanding of the Stock Markets?
Have you ever wished that someone would teach you the very basic ABC of Stock Markets?
Have you tried to understand the working of Stock Markets but found yourself lost and overwhelmed by all the market jargon and expert speak???

 

Match Your Answers

You have been told that Mutual Fund Investments, Systematic Investment Plans (SIP) etc is the best financial strategy for you but you do not understand the Stock Markets and therefore you are not able to develop an interest in it.

You have tried many a time to educate yourself by talking to Stock Market savvy and expert persons and asking questions but most of them end up confusing rather than enlightening you.

You have been on Google, and Quora to seek answers but except for becoming more familiar with Stock Market terms, you are still searching for the right knowledge while pretending that you are reasonably comfortable with Stock Market terminology.

 

Friends, you are not alone. I am also one of you. Join me on my journey to understand and discover the story of the Stock Markets. Together let us explore and understand.

 

 

Introduction to various Business Formats

Are you excited to begin your Stock Market ABC ?
Are you all ready to start on the basic and simple foundations of the Stock Markets? Yes! Awesome!!

Sole Proprietorship Business

Let us start with an introduction to the various formats of any business. Today, we will learn about Sole Proprietorship which is business at the simplest and most basic level.

With the advent of civilisation early man tried his hand at business and trading. This started with the Sole Proprietorship Business format.

 

 

What is a Sole Proprietorship

In this form of enterprise, the business is owned and run by one single person. This person is generally the bread winner, decision maker, and the head of his/her family. This person begins to do business and registers himself as a Sole Proprietor. He/She puts up all the funds or money needed by the business. This money is called the capital required to run the business.

He/She enjoys all the profits that the business makes and is also responsible for all the losses and debts that the business incurs.
Our forefathers, yours and mine, most probably started their business in this format. In fact, even today, most small businesses in many parts of the world follow this method.

 

 

Limitations of Sole Proprietorship

However, this Sole Proprietorship business has its own limitations and challenges. One person can only afford to put up as much capital as his/her pocket permits. Also, time is restricted as one person can only do a few jobs at any point of time. Moreover, a single person may not have the required expertise in all areas of the business.

Capital and risk fall wholly on the shoulders of one person, so expansion is restricted and limited. Hence, growth potential gets reduced.

 

Interesting Titbits

Did you know, that some of the most recognised names in the business actually began as Sole Proprietorship, eBay was started by Pierre Omidyar when his girlfriend faced difficulties in selling some old dispensers and collectibles. Omidyar decided to bring people selling old merchandise to the internet. He started a Sole Proprietorship in 1995 with a prototype called Auction Web. Shortly, thereafter, the company was incorporated. The name changed to E-Bay and it went public in 1998. Soft drink giant, Coca-Cola also started as a Sole Proprietorship.

Conclusion

Limited capital & risk taking capacity led to the growth of the next format of doing business (i.e., Partnership Business). Simple and logical, right!
So friends, ponder on this and give your valuable comments and suggestions. Come back recharged to learn the next basic and simple form of business in my next post.