This assessment is about a topic on showing the analyzing and comparing of the differences between Debenhams, which is a Public Limited Company, and Bridal Makeup & Hair by Sarah Elizabeth Abbott, which is the chosen Sole Trader. This essay covers the differences on different aspects of business ownership between Debenhams and Bridal Makeup & Hair, such as their conditions, benefits and risks, which differ considerably.
Debenhams, a Public Limited Company, is a dominating international and multi-channel British brand, which branches out to 240 stores across 28 nations. Debenhams provides its international customers an exclusive variety of both ...view middle of the document...
Hence, personal assets own by the shareholders of a public limited company like Debenhams cannot be taken to risk if the business gets into debt.
Public limited company has separate legal entity and is not affected by the death of one of their shareholders. Her shares are transferred to the next selected person and the company continues to run its business like normal. For example, in the case of the death of Debenhams’ director, an election will be held to replace the deceased director.
A sole trader does not have a separate legal entity and the death of the owner greatly affect the running of the business. Since Sarah Elizabeth Abbott does not have anyone with suitable talent to pass on her business, her death can cause her business to immediately cease.
A sole trader like Sarah Elizabeth Abbott works on her own and does not employ anyone else. It is simpler for Sarah to keep general control, in light of the fact that the she has an involved way to maintaining the business and can settle on choices without counseling any other individual.
However, public limited companies like Debenhams are huge in size and greater control and effort must be put on the other shareholders.
The sole trader can make quick decisions and act on them immediately whilst meeting the customers’ demands. The sole trader is in full control of the business and does not have to rely on any other opinion. However, all decisions must be made by the sole trader. The sole trader cannot seek for help from others, so the success or failure of the business relies solely on the sole trader.
Debenhams is a huge company with a huge number of shareholders. Public limited company like Debenhams may face management problem like slow decision-making, as it has to go through the huge number of shareholders and hence, there will be more problems to think of and to be solved.
Public limited companies have no privacy when it comes to their finances. They are required by law to publish their complete financial statements every year. This is to make sure that they show their true financial position to their owners and to potential investors so that they can determine the true worth of its shares.
Since a sole trader, like Sarah Elizabeth Abbott, work on her own and has no staff on hand, she can take all the profits she earned. Also, all her financial information will be kept private to herself.
Debenhams and any other public limited companies have the ability to sell their shares to the public via the stock market. Selling of shares enable them to increase their capital. Also, public limited companies can increase their additional capital by issuing more debentures or shares through the same market from the public.
Bridal Makeup & Hair is more likely to have a hard time to increase her capital since she cannot sell her business shares.