Types of business and their differences

A business is any type of activity that aims to generate income in cash equivalent. There are various types of business that depend on the model of management, organisational structure and the way of income generation. Also there are several types of their classification.

Fields of business

Business is divided into varieties according to the methods of earning. Any of them can become the most profitable and promising, if the manufacturer determines the relevance and demand of the product or service to the consumer correctly.


Enterprises that create goods for the public or other organisations and intermediaries of the market are the foundation of any production business. This field of business will require the entrepreneur to pay for the purchase or lease of commercial space, equipment, work planning, hiring qualified employees and paying salaries to these people. If you want to choose the type of capital to start this business, we recommend you either own or borrow capital. The size of the production business varies, such as a small trading platform with a team of two employees or a big business.

Service provision

Unlike production business, this field of business does not require large financial investments from the entrepreneur at the initial stage. The human cost is the main factor in calculating the cost of all services in this field. The low entry threshold is the main advantage of this field of business because you can simply sell your knowledge and skills. Working on the Internet allows users to save on renting space too.


An organisation or individual entrepreneur makes a profit, which is expressed in the difference between the value of a unit of goods when buying a lot in bulk and reselling of this product. There is also the possibility of starting work without major investment and special training for you. However, there are many risks for competition and lack of demand.


It is another very popular business area in which the organisation offers clients protection against adverse life factors and events, as well as providing monetary compensation if they have already occurred. The user and the insurance company conclude a contract in which they establish the terms of the agreement and the cost of the services. Private property, motor vehicles, life and health insurance are the most common.

Types of business


This type of business is a very large and separate field because of a unique method of profit, which is expressed as a percentage of transactions and dividends. Financial market participants are knowingly taking big risks. Banks and stock exchanges are characteristic representatives of this type of business.

Passive income

It does not require a beginner entrepreneur to continuously participate in business or other activities, but it is related to making profits too. There are many factors of passive income, such as investing in various projects, bank deposits, buying shares and other securities, and also leasing property. Depending on the chosen form of business, the market participant can make a profit on a permanent basis or expect income in the future.

Business size

Business is something that is classified by categories too, but according to the scope of the market, the size of income and retail space. So, there are three such types of business:

  1. Big business. Long-term development and huge capital, the ability to invest in advertising significant funds and attract foreign investment are its characteristics. It includes large companies whose interests are not limited to a particular city or country, because they tend to have branches in different regions. Companies belong to this type of business, in whose units there are thousands of people and more. Manufacturers of household appliances and electronics, as well as food are the most characteristic representatives of this type of business.
  2. Medium-sized business. Average profit and wide distribution of products is a distinctive feature of this type of business. Such enterprises often include a network of outlets and serve a large customer base. In the workforce of medium-sized businesses, there are more than 500 employees.
  3. Small business. Individual entrepreneurs and small companies with a staff of up to 100 people are examples of such a business. This type of business is characterised by small retail space and a limited customer base. As a rule, the State provides support to small businesses, which takes the form of preferential taxation and timely issuance of loans and payment of subsidies. Family businesses are the most popular example of this type of business.

Medium-sized businesses are among the most influential ones in relation to the entire planet, since almost one third of the revenue of states is theirs. The modern market provides wide prospects for every entrepreneur. If you plan to create a reliable and profitable business, then you should choose the course of activities correctly because its result and profit depends on it.