Question

This shop is a sole trader and needs to obtain finance in order for the business to continue trading. Explain

Answer 1

Answer:

see below

Explanation:

1. Personal Savings

The sole trader can invest his savings into his business for expansion. A sole trader who is confident about his business's prospects will be prepared to invest additional savings into the business for growth. The use of savings relieves them from the strain of interest payments and enables them to retain full control over the business.

2. Sale of Assets

Should a sole trader require funds to expand their business, they opt to dispose of some of their assets.  If the trader does not have savings or retained earnings and have a property registered in their name, they may decide to sell it to raise capital.