Generally, there are three main types of businesses such as manufacturing, service, and trading. We have shed light on each type with an in-depth elaboration right below:
A business owner who goes for a manufacturing type of business sets up a factory, decides what to produce, hires required labor, installs machinery, finds a location conducive for production and employs all his or her other resources for making a product, markets it to the target customers and hence earns profit from it.
Most manufacturing setups generally require a huge capital in the form of sweat equity as well as loans from financial institutions. The incorporation of a manufacturing business usually takes a lot of time due to the legal formalities. However, the positive of a manufacturing concern is that it makes a lot of profit compared to the other types of businesses and if the owner produces the right product at the right time and sell it at a right price to the customers.
Well, under a trading type, a business owner buys manufactured goods from the manufacturer to sell them to the customers. Often, manufacturers sell their goods to wholesalers who in turn sell them to retailers and from there it reaches the customer. Under the trading business, you’re not required to have machinery or a huge capital. But a certain amount of investment along with registration and other facilities is necessary for starting a trading business.
A service type of business, as the name itself implies, deals with providing services to customers instead of physical goods. Have you ever been to a doctor? Yes, what he does is that he provides services of his professional learning to you so that you may overcome your sickness or illness. Service industry like manufacturing is also a very wide industry. For example, it may include financial institutions, insurance companies, healthcare, public services, etc.