Risks

Risks
• The responsibility is all yours. You bear the sole responsibility for
everything that happens in your business. You are the ultimate decision
maker and you will also bear all of the responsibility for the outcome of
those decisions. This disadvantage can be mitigated as you grow by
utilizing advisors and designating certain tasks to employees with the
proper skills. If you fail to grow past a one-person operation, you will have
to cover all areas such as, accounting, marketing, and customer relations,
as well as everything else related to offering your products and/or services.
• You are liable personally for the debts of your business. You
will be personally liable for all business debts. This means that your
personal assets (home equity, savings, vehicle, etc.) are at risk if your
business becomes indebted beyond its capability to pay.
• Financing may be difficult to obtain. Because your business is
dependent on one person only, a banker or investor may be less likely to
give you a loan or invest funds in your company. If you do get funding,
you will be personally liable for repayment.
• The business is dependent on your ability to operate it. If you do
not have other people who are capable of carrying on the business in your
absence, it can be disastrous. What’s more, if you should die, the business
ceases to exist as a legal entity.