A sole proprietor is less inclined to take risks in the form of innovation or expansion. Why?

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Solution

A sole proprietor is less inclined to take risks in the form of innovation or expansion because, if his decision goes wrong or unfavourable, it can create a serious financial burden on the owner or loss to the business. As the sole proprietor has unlimited liability, his personal property can be used to cover up such losses.

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Similar questions

Identify the merits or limitation of sole proprietorship hidden in the quoted line.

(a) "The sole proprietor can easily change the size of the business."

(b) "All the profits of the business belong to the sole proprietor."

Which of the following input factor takes risk, innovates, and coordinates:

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