Why is it vital for a a soletrader to control costs?

Aside from the following;


unable to operate the business due to bad debts and so on


owner may face law suits and may have to sell off assets


unable to pay overheads


business and owner reputation hindered


problems with suppliers and employees


unable to develop businessWhy is it vital for a a soletrader to control costs?
None of the reasons you mentioned is the correct answer or even part of it.





All businesses have to control costs because turnover says nothing about the profitability of a business. It is the net profit which finances everything a business requires, including capital purchases, purchases for resale, wages and bank interest.





Costs being controlled are what allows the business to spend less than it earns and thus finance it's costs and leave a profit.





A sole trader has to be particularly careful because there is no limited liability protection which exists for a limited company so the proprietor is personally liable for business debts and losses.

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