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