LIMITATIONS OF SOLE PROPRIETORSHIP FORM OF BUSINESS ORGANISATION:

 LIMITATIONS OF SOLE PROPRIETORSHIP FORM OF BUSINESS ORGANISATION:

(a) Limited Resources: The resources of a sole proprietor are always limited.

Being the single owner it is not always possible to arrange sufficient funds from
his own sources. Again borrowing funds from friends and relatives or from
banks has its own implications. So, the proprietor has a limited capacity to raise
funds for his business.
(b) Lack of Continuity: The continuity of the business is linked with the life of
the proprietor. Illness, death or insolvency of the proprietor can lead to closure
of the business. Thus, the continuity of business is uncertain.
(c) Unlimited Liability: You have already learnt that there is no separate entity
of the business from its owner. In the eyes of law the proprietor and the business
are one and the same. So personal properties of the owner can also be used to
meet the business obligations and debts.
(d) Not Suitable for Large Scale Operations: Since the resources and the
managerial ability is limited, sole proprietorship form of business organisation
is not suitable for large-scale business.
(e) Limited Managerial Expertise: A sole proprietorship from of business
organization always suffers from lack of managerial expertise. A single person
may not be an expert in all fields like, purchasing, selling, financing etc. Again,
because of limited financial resources, and the size of the business it is also not
possible to engage the professional managers in sole proprietorship form of
business organizations.