What is a key disadvantage of a sole proprietorship?

What is a key disadvantage of a sole proprietorship?

• A. Limited life span
• B. No boss
• C. Easy to scale
• D. Share decisions

Answer: (A)

A key disadvantage of a sole proprietorship is its limited life span. This means that the business is intrinsically tied to the owner; if the owner decides to close the business, retires, or passes away, the business effectively ceases to exist. This lack of continuity can make it challenging to build long-term relationships with customers, suppliers, or employees. Additionally, it can limit the business's ability to grow or attract investment, as potential stakeholders may be hesitant to invest in an entity with no longevity beyond the owner's involvement. The other aspects, such as having no boss, easy scalability, and the sharing of decisions, are typically advantages of a sole proprietorship or relate to different types of business structures. The autonomy of operating without a boss can be appealing, but it also means the owner bears all responsibility. Scaling a sole proprietorship can be challenging due to limited resources and reliance on the owner's efforts. Sharing decisions is not applicable in a sole proprietorship because it is run by a single individual who makes all the decisions.

A key disadvantage of a sole proprietorship is its limited life span. This means that the business is intrinsically tied to the owner; if the owner decides to close the business, retires, or passes away, the business effectively ceases to exist. This lack of continuity can make it challenging to build long-term relationships with customers, suppliers, or employees. Additionally, it can limit the business's ability to grow or attract investment, as potential stakeholders may be hesitant to invest in an entity with no longevity beyond the owner's involvement.

The other aspects, such as having no boss, easy scalability, and the sharing of decisions, are typically advantages of a sole proprietorship or relate to different types of business structures. The autonomy of operating without a boss can be appealing, but it also means the owner bears all responsibility. Scaling a sole proprietorship can be challenging due to limited resources and reliance on the owner's efforts. Sharing decisions is not applicable in a sole proprietorship because it is run by a single individual who makes all the decisions.