Classification of types of business

There are 3 ways to make money in business.

Production.

Trading.

Provision of services.

Production.

Production can be created for your personal product.

 

This is when you yourself have studied the market, the client. They realized that a certain target audience has a need for something and became a manufacturer of goods.

 

The second method of production is to produce for the customer, according to his drawings. A striking example is Ikea, it does not have its own furniture factories, it orders the production of its furniture from various local manufacturers and sells products under its own brand.

 

The third type of production can be called the development of a product and the sale of a license for its production, or making a profit from patent rights. Ie, the point is that you come up with something, develop, but earn not on the production of this, but on the sale of the development itself.

 

Trading.

Sale of consumer goods and distribution of goods of large manufacturers.

 

It is supposed to integrate into the chain of "production and sales" of other manufacturers and engage in the trade of their goods. In such a business model, you will have clear prices for the purchase of goods. Most likely, you will take the goods from the manufacturer for sale, thereby receiving a deferred payment. Your business becomes only assortment management, sales, merchandising, i.e. full focus on product sales.

 

The second type of sales, I would call, the independent purchase of goods from suppliers. In this business model, you search for goods yourself, you buy them and store them in your warehouses. You control the leftovers yourself, i.e. you can have surpluses. Good or bad the product is sold - all the risks remain on you, because the money has already been invested in the product. A freer, but riskier type of business.

 

The third type of trade is a franchise. In fact, you are buying a ready-made business in which you have already developed a brand, business model, merchandising, documentation, advertising, created demand, a sales plan. You just have to manage this business and pay the franchise fees.

 

There is also a wholesale trade. Perform the function, so to speak, of a logistics center. Wholesale purchase, and distribution to small retail outlets.

 

I would call the sale of digital products a separate type of business tied to sales. And the trend is that the software is almost not sold in a box, due to the fact that the media in the form of disks have almost died out. And now, as a rule, software distribution is carried out via the Internet. And payment is made for providing a special key, or paying for a subscription. This direction is very promising in our digital time. And it has a number of attractive advantages, namely: there is no need for the logistics of goods, in warehouses, more often than not even a purchase does not need to be made. All business takes place on the Internet, which is convenient in itself. I am personally engaged in this area.

 

Provision of services.

In this type of activity, you do not produce anything material, do not resell other people's goods. You, either by yourself or by your employees, provide services to other people.

 

Services may be related to:

 

Training

Consulting

Preparation and execution of documents.

Representative office.

Services related to body care. (cosmetologists, treatment, fitness, etc.)

Maintenance of premises, territory, equipment.

Logistics of goods or transportation of people.

Despite the fact that I have listed a fairly large number of activities that can be engaged in business, they can be divided into 2 classes, according to the way of doing business.

 

You are part of someone else's big business.

This is when you associate your activity with a business that has already been created by someone.

 

You are implementing your own entrepreneurial initiative, you have come up with everything yourself, you manage everything yourself.

Now that you understand this, I recommend that you take a look at your own business model and identify it by type of activity. This is very important to understand, because the strategy of your further development will depend on it.

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