Main Types of Business-Forms of Business

What is Business?

Business is an economic activity of production and goods distribution to the consumers, it has different types and forms. But there are three main types of business. 

  • Manufacturing
  • Service
  • Merchandising

 It (Business) provides employments which plays a great role in the progress of the country and the nation.

In a simple way, Business means any activity, struggle, or action for earning and profits through selling, buying, purchasing, manufacturing, supplying, distributing etc.of course to feed one’s self, his family and dependants in the present and for the future, It can be private or organizational, can be  producing,creating,manufacturing ,selling or buying and selling at the same time. whatever the mode or types of business the primary goal is to get the highest possible level of profit.

To better understand the term “Business” we need to know the three main types of business, which are mentioned below, take a look...

Main Types of Business 

main types of business
types of business

1-Services:

This is one of the main types of business. Services are offered to help the clients to overcome the troubles by troubleshooting through professional skills, technical support, advice, expertise, and supplies of required Items, tools or parts. For example,Schools,banks,law firms,shops for repair,Salons etc.

2-Manufacturing: 

It is another example of one of the main types of business, It's a process to produce, fabricate, creating something. The manufacturing process completes step by step. Manufacturer purchases raw materials to fabricate something new. It combines services, raw materials, machinery, labor, and overheads in its manufacturing process.finally will be sold to the customers.it is no doubt one of the most important and main types of business, which work like a root in the business process. 

3-Merchandising:

It’s also one of the most important types of business form, here someone buys/purchases products from manufacturers and sells it on retail price. Merchandisers only buy something and sell it without changing the products and make money as profit. This is one of the more relaxed but one of the main types of business as well. If we go into short details,  we have 02 types of merchandisers, which I elaborate on for you in the following lines.

You can consider it also a major type of business.

  • Wholesale dealers. These business dealers generally called wholesales dealers, who buy products in bulk quantities from manufacturers and sell them to retailers.
  • Retailers. usually buys from wholesale dealers sells at retail price in single/double pieces. for example small shops or stores in the towns or villages. 

Miscellaneous types:

There are some mix and major types of business, where we can find all 03 types of business in one place. like Hotels, Restaurants etc.where they prepare(manufacturing)food items, arrange and sell liquids like soft drinks, cold drinks/water, etc(Merchandising) fulfill customer’s requirements (services).

Forms of Business Organization

main types of business
forms of business organization

If we want to take a better look, we need to know the forms of the business organization also. For example:

Sole proprietor:

Whenever we start talking about forms of business organization, Sole Proprietor comes at # 01. This means a single person is responsible for everything because he is the single owner, it’s a kind of small business.it is easy to set up and control can be started with low investment. If there is a question of what is the best form of business ownership? the prompt answer will be “Sole proprietorship” why? Because this is one of the best forms of business ownership, The owner enjoys benefits and profits as well as liable to pay andy kind of credit or damage claimed. It means he can set his own rules to run a business at his convenience.

Partnership:

One of the most popular forms of business organization, in which a business owned by more than 01 people, can be 02 03 or 10 etc.who shares the resources into the business.in partnership, the partners share the benefits, profits as per their deal already promised or settled. On the other hand, partners would be liable to bear any kind of damage or loss according to the same formulation already promised among them.

There are different kinds of partners who act according to their role.

  • Active partner
  • Sleeping partner
  • Nominal partner
  • Minor partner
  • Limited partner
  • Estoppel partner
  • Partner of profit only

Corporation:

It is one of the important forms of business organization, which has a separate identity from owners. legally it acts like a person. It can make contracts, hire employees, take loans, borrow an item, sue and be sued payment of tax and own assets. Owners don’t have more liabilities, they have limited involvement and bear limited liabilities but enjoy unlimited benefits. Business activities of the corporation are usually controlled by a board of directors, a group of elected members. A large number of people from different categories are attached to the corporation to run its business smoothly.

In addition to the above details, there are some other common forms of organizations.

In addition to the above details, there are some other common forms of organizations.

Limited liability company:

This form of business has miscellaneous characteristics of both partnership and corporation. we can consider it a Corporation because it is not incorporated. Click to learn about How to Register a Company in Pakistan.

Cooperative:

It is one of the uncommon forms of business established by a group of people, who are called members.

Who establish it for their mutual benefits.it may be unincorporated or incorporated.for example Cooperative banks, Housing cooperatives, etc.

Summary words:

With the details explained in the upper paragraphs, I hope you got some important information about the main types of business and important forms of business organization. Stay blessed.

One Comment

Add a Comment

Your email address will not be published. Required fields are marked *