Why do most sole proprietorships remain relatively small?
A) because their shareholders would rather receive dividends than have earnings reinvested to finance growth
B) because the owners often disagree about the need to take on additional risk associated with growth
C) because they have limited ability to raise funds needed to finance growth
D) because government regulations limit their ability to expand into new areas of business

Question

Quizplus · Accepted Answer

Most sole proprietorships have limited ability to raise funds, which makes it difficult to finance growth. Therefore, they remain relatively small.

Answer: A and B are incorrect 
 The issue of dividends and disagreements between owners may affect growth, but they are not the primary reasons why most sole proprietorships remain small. However, government regulations may limit their expansion in some cases.

Why Do Most Sole Proprietorships Remain Relatively Small