Disadvantages of Sole Proprietorship

Unlimited Personal Liability
This means that the sole proprietor is personally liable for all the business debts. In a sole proprietorship, the owner is the business. If unpaid business debts remain, creditors can force the sale of the proprietor personal assets to recover payments. In short the business’s debts are the owner’s debts.

Limited Skills and capabilities
A sole trader may not have the wide range of skills that running a successful business. Many business failures occur because owner’s lack skills, knowledge, and experience in areas that are vital to business success

Feeling of Isolation
Running a business alone allows an entrepreneur maximize flexibility, but it also crates feeling of isolation that there is no one else to turn to for help in solving problems or getting feedback on a new idea. Most sole proprietors will honestly admit that there are times when the feel pressure of being alone and being fully and completely responsible for every major business decisions.

Limited access to capital
If the business is to grow and expand, a sole proprietor generally needs additional financial resources. Proprietors, unless they have great personal wealth, find it difficult to raise additional money while maintain sole ownership. Most banks and other lending institutions have well-defined formulas for determining borrower’s eligibility. Unfortunately much sole proprietorship cannot meet those borrowing requirements, especially in the early days of operation.

Lack of continuity for the business
If the proprietor dies, retires, or become incapacitated, the business automatically terminates. Unless a family member or employee can take over .