Companies with a single owner are more susceptible to bankruptcy 54 percent of bankrupt limited liability companies had only one owner Lidové noviny, Prague, 19/10/2009

​Limited liability companies that have only one owner are more susceptible to bankruptcy than companies with several owners. While the share of firms with one owner amounted to 43 percent of the total number of companies in August, the share of declared bankruptcies attributed to sole traders amounted to 54 percent, which is 11 percent more. 
This comes from information from the Cribis.cz portal, managed by CCB – Czech Credit Bureau.
 
​“If an individual owner makes decisions about a company, it is generally riskier for the operation of the company. In this case, the company’s operation is influenced by the intervention of a single person, who can naturally err once in a while. And because they decide alone, they have nobody to look at things from a slightly different angle, to add their own, albeit very different experiences to decision-making, and to point out possible risks,” said Věra Kameníčková, Head of the Analytic Centre at CCB – Czech Credit Bureau, which operates the Cribis.cz business information portal.
 
In addition, analysis shows that a higher percentage of limited liability companies owned by a single owner went bankrupt not only in August, but over the long term. This can be seen from statistics which show that from 4588 limited liability companies which declared bankrupt from January 2004 to August 2009, an average of 47 percent of companies had a single owner in the year they declared bankruptcy. Yet the average share of limited liability companies with a single owner was 39 percent of the total number, which is eight percent less. So among other things, these figures show that the share of bankrupt limited liability companies owned by one owner is gradually increasing.
 
“As in many other areas, the saying ‘two heads are better than one’ applies in this case. In practice, several partners can mean that various opinions about the pros and cons of this or that step in company management are brought into decision-making. A properly conducted debate can guide incorrect decisions or prevent them, thus reducing the risk of bankruptcy,” added Věra Kameníčková.
 
The analysis also indicated that the share of limited liability companies with a single owner is gradually increasing. While in 2004 the number was 35 percent, this year it reached 43 percent. This means that there is a rising number of companies whose management is decided by a single person.
 
“The starting up a company by a single owner, like its management, is easier because the owner does not have to deal with anybody else, or seek solutions that suit two or more owners. If the decision is up to one person, it tends to be faster. On the other hand, the owner cannot blame anybody but himself for potential mistakes,” added Věra Kameníčková from CCB – Czech Credit Bureau.
 
According to Ms Kameníčková, decision-making by two or more people requires patience, the ability to listen to the opinions of others and the art of consensus. This may be tedious for some. The reason why a number of entrepreneurs do business alone may also be due to previous bad experiences. She believes a parallel can be found in personal relationships, where recently more and more people are remaining single, or have a partner but do not get married.
 
Table 1: Bankruptcies: share of limited liability companies with a single owner compared to the total number of limited companies
Source: CRIBIS.cz, CCB - Czech Credit Bureau, a.s.
 
 
Table 2: Share of limited liability companies with a single owner compared to the total number of limited liability companies
 
Source: CRIBIS.cz, CCB - Czech Credit Bureau, a.s.

CCB - Czech Credit Bureau was founded in November 2000. CCB is a one-hundred-per-cent subsidiary of CRIF, which is the world’s fourth largest company operating credit registers and systems to support loan decision-making.