What is the main disadvantage of a sole proprietorship?

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Question: What is the main disadvantage of a sole proprietorship?

Options:

Correct Answer: Limited capital raising ability

Solution:

The main disadvantage of a sole proprietorship is the limited ability to raise capital, as it relies solely on the owner\'s resources.

What is the main disadvantage of a sole proprietorship?

What is the main disadvantage of a sole proprietorship?

Step 1: Understand what a sole proprietorship is. It is a business owned and run by one person.
Step 2: Recognize that the owner is responsible for all aspects of the business, including finances.
Step 3: Identify what 'raising capital' means. It refers to getting money to start or grow the business.
Step 4: Realize that in a sole proprietorship, the owner can only use their own money or loans, not money from investors.
Step 5: Conclude that this limited access to funds makes it harder for the business to grow or expand.

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