Excellent Question Mini696
One main reason is to raise funds to expand the business. When you raise equity there is no need to repay the amount, whereas raising debt needs to be repaid.
Another reason is that to list on the ASX is to shift ownership from possibly one person to a group of people who can sell their holdings to other people. Equity holders demand that the company elects a board of directors who elects a CEO to run the company. This allows the company to become perpetual, where as your small plumbing business down the road will close down when the owner retires.