Differences between
The mission of a business and the objectives of a business
- A mission is typically higher level than an objective and viewed on a longer term by a business. An objective might be to increase profit of a certain market area by 25% over a period of time, whilst the mission might be to bring affordable clothing to everyone.
Private and public limited companies
- The shares of a private limited company are not floated on the stock market
- A public limited company requires at least £50,000 in capital to launch
- Many companies start private and go public
- Public companies have additional reporting requirements
Limited and Unlimited Liability
- Limited liability means that shareholders are not responsible for the debts of the business
- Whilst unlimited liability means any debts that the business has are shared between shareholders should they need to be collected
- Limited liability is much safer from a legal viewpoint
The objectives of a sole trader and the objectives of a public limited company
- A sole trader is likely looking to make a living by selling goods or services in a single location, with only several employees
- Public limited companies have much larger and broader objectives, as they will typically try to achieve societal changes and will operate on a larger scale with a significantly larger amount of capital.
Private and public sector organisations
- Public sector organisations are run by the government
- Private sector organisations are run by individuals
- Public sector organisations are typically run for public benefit, such as the NHS, the fire department of the education system
- Private sector organisations are usually run for profit (typically the case of private & public limited companies) although not always as many charities and NGOs are not run for profit but are also not considered public sector.
Ordinary share capital and market capitalisation
- Ordinary share capital is money raised through selling shares
- Market capitalisation is the total value of all of the shares for a business
Benefits and Drawbacks
Sole Trader
-
Easy to setup
-
Cheap
-
Little paperwork
-
Full control
-
Unlimited liability
Private Limited Company
- Fairly easy to setup
- Limited liability