"Demerits of Sole Trading Concern"

                   “A sole trader is a person who trades on his own account rather than in partnership or as a member of a company.”

                   Sole trading concern is the oldest form of commercial organisation. Sole means one person. So a trading concern is an organization where all business activities are controlled and managed by one man. He is also solely responsible for the debt and risk of the firm. The following are some of the features of a sole trading concern.

                  There are the many disadvantages of Sole Trading Concern. The disadvantages of Sole trading concern are as follows:

"Demerits of Sole Trading Concern" 

(1) Limited Capital:-

                        The capital of one proprietor is usually small. It is limited to his personal savings and borrowing on personal security. Hence, he cannot undertake further expansion and development lack of excess capital and fails to enjoy the internal and external economics of scale.

(2) Limited Management Ability:-

                        In the present competitive world complexities of managerial jobs are increasing every day. One man cannot be expert in each and every function of the business. For lack of resources he may not be able to use the services of experts. So limited managerial ability will hinder the growth of the firm.

(3) Unlimited Liability:-

                       The unlimited liability of sole proprietorship is a great disadvantage. A loss in business may deprive the proprietor of his assets too. So big business firms requiring more economic risk are not established under this organization.

(4) Uncertain Life:-

                      The success of this type of business depends on the personal capacity of proprietor. In case of his death business may be discontinued. The successors may not have the same degree of self-reliance and ability. Thus, there is no continuous existence of the firm.

(5) Dull and Monotonous Work:-

                     The proprietor has the sole right on profit of the business. So he tries to work more to earn more profit. Consequently the work becomes dull and monotonous. His health is badly affected and he is deprived of pleasant social relations and cordial family life.

(6) No Large Economics and Specialization:-

                       A small scale business cannot economies in purchases, production and marketing. Similarly the benefit of specialization of service of experts cannot be obtained.

(7) Loss in Absence:-

                       A sole trading has to suffer from the long illness of the proprietor. In his absence business comes to a standstill. This can lead to heavy losses. Employees may not be efficient or they may not take sincere interest.

(8) Possibility of Wrong Decision:-

                        In sole trading a businessman alone makes all the decisions. Hence, decisions may not be always right and wise. When a considerable number of people are involved in decision making process a wise and mature decision is possible.