Now that you have made the decision to start a business, what type of business should you start?
1. Retail business? Retail businesses sell goods directly to consumers, usually in small quantities. Examples of retail businesses are provision stores, supermarkets, pharmacy stores, electrical and electronic shops, filling stations, bookstores and restaurants.
2. Wholesale business? Wholesalers buy goods (often in large quantities) from manufacturers or importers and then sell them to retailers and other distributors. Examples of wholesale businesses include flour distributors, soft drinks and beer distributors, distributors of FMCG.
3. Import Business Importers bring in goods from abroad and foreign countries for sale and supply in the home country. They deal between two countries, the home country and the foreign country. Examples of importers are Car importers, Computer and software importers.
4. Export business? Exporters do the exact opposite of what importers do. They supply locally made goods to foreign buyers and countries. They also deal between two countries, the home country and the foreign country. Examples of exporters are Car manufacturers, Agricultural merchants, computer and software makers.
5. Franchise business? A franchise is a right sold to you by another business (the parent company) to sell the parent company's goods and/or services or engage in the business of the parent company in a specific area. When you buy a franchise you will have to pay a franchise fee and royalties. You will also be expected to abide by the terms of the franchise agreement, which will often lay out exactly the way you will do business.
6. Independent business? An independent business is one that you create and nurture on your own. Starting a independent business allows you the control and freedom that you won't get from a franchise operation.
7. Product or service business? You also have to make a decision whether to offer tangible products or services. Tangible products include such as carbonated drinks, lighting products, cars, etc. Services on the other hand are intangible like training, consulting services, web services, brokerage services, etc.
8. Storefront or non-storefront type of business operation? You would also have to decide whether you need a store or not and whether you want to distribute through other channels such as mail order, e-store, ecommerce or home delivery.
9. Manufacturing business? These are businesses that focus on manufacturing and conversion of raw products or semi finished goods into consumer or industrial goods. Most manufacturing firms start off as small or medium scale enterprises and they grow. In some cases the firm may also start off as a cottage industry or as family run enterprises. Manufacturing firms play in the real sector and generate multiplier effects in the economy and they include agro-processing industries. Manufacturing firms depend on raw materials, machinery, processes, infrastructure market and a real effective demand to survive. To run a manufacturing business you therefore need to be sure of the raw materials for your manufacturing process and the machinery to convert your goods.
10. Home based Business As the name implies, a home based business is one that you can carry on from the comfort of your home. Here you do not need a formal office and other infrastructure. There are many types of home based businesses. They include hairdressing.
11. Web/Internet based business With the growth of the internet, a whole new vista was opened for businesses run on the web. With the internet you can run any form of businesses so long you have the right soft ware and ecommerce platform. Businesses in these area include ecommerce, ebook merchandising, e-store and a whole lot of others. The global giants eBay, alibaba.com, Amazon and Barnes and nobles are all web based businesses.
12. Agricultural Business Agricultural business involves farming of one sort or the other such as crop farming, tree planting, livestock farming. Farming concentrates on the production of food and basic raw materials.
13. Mining/Extractive business Mining is concerned with the extraction of natural resources embedded within the earth. These include petroleum exploration, sand dredging, diamond mining and other forms of solid minerals mining.
14. Financial business These include banks, insurance companies, stock brokers, investment houses, leasing companies, mortgage houses, microfinance, bureau de change, and other companies that generate profit through investment and management of money.
15. Tourism and Entertainment business The entertainment industry includes movie production, music, cinema, night clubs, Television, events centres and events packaging, hotel, relaxation sports, gardens, etc.
16. Media business The global giants CNN, Aljazera, Newscorp and Times are all in the media business. All businesses involved in one type of radio, television and cable broadcasting and in publishing either by paper or by the internet are all in the media business.
17. Information business Information businesses generate profits primarily from the resale of intellectual property and include movie studios, publishers and packaged software companies.
18. Real estate businesses. Real estate business involves the selling, renting, management and development of properties, homes, offices and buildings. This has become big businesses in recent times and one can play on a small as well as big scale depending on your capital, market, focus and connections
19. Construction and Civil Engineering business Construction and Civil Engineering businesses are those in the building of roads, bridges, airports, buildings, seaports, rail lines, factories, canals, etc.? This is a capital intensive, skill intensive and machine intensive business.
20. Training, Public speaking and Consultancy Training, Public speaking, Coaching and Mentoring has emerged as a separate industry of its own. Many professionals now earn their livelihood from this lucrative and growing industry. Prerequisite here are training, experience, personal organization, network, good command of language and public speaking ability.
21. Transportation businesses. This is all forms of transportation involving the movement of goods and persons from location to location. It includes shipping, haulage, freight, road and passenger transport, pipeline and rail.
22. Public Utilities Public Utilities produce and supply public services such as electricity, water, postal services, waste management, sewage treatment, usually under a government control.
Types of Business Ownerships
- Sole proprietorship: A sole proprietorship is a business owned by one person. The owner may operate on his own or employ others. The owner of the business has unlimited liability for the debts incurred by the business. A sole proprietor may do his business using his name or with a registered business name.
- Partnership: A partnership is a business owned by two or more people. In most forms of partnerships, each partner has unlimited liability for the debts incurred by the business. The three typical classifications of partnerships are general partnerships, limited partnerships, and limited liability partnerships.
- Company / Corporation: A company or corporation is a limited liability business that has a separate legal entity from its members. Its existence and creation is guided by the memorandum and articles of association. The memorandum stipulates the objects clause and what the corporation can do while the articles addresses the relation between the members and the directors. Corporations can be either government-owned or privately-owned, and privately-owned corporations can be either for-profit or not-for-profit. A for-profit corporation is owned by shareholders who elect a Board of Directors to direct the corporation and hire its managerial staff. A for-profit corporation can be either privately held or publicly held. A private company or corporation has a maximum of 50 shareholders and in the case of countries like Nigeria ends its name with the word limited. A public held company or corporation has no limit on the number of shareholders and ends its name with plc (public liability company) as in the case of countries like Nigeria.
- Cooperative: Often referred to as a co-op, a cooperative is a limited liability business that can organize for-profit or not-for-profit. A cooperative differs from a company or corporation in that it has members, as opposed to shareholders, who share decision-making authority. The cooperative is guided by a constitution.
- Trustees and NGOs:Trustees, charities or NGOs (Non-Governmental Organization) are social or not-for-profit businesses set up to offer social services to the public. The Bill and Melinda Foundation is a good example here.
- Private companies - are small businesses that want to keep the control of the business within a few hands. They are not allowed to have more than 50 shareholders and their shares cannot be traded on the stock exchange.
- Public or Quoted companies - are companies with public ownership. Their shares are sold and traded on the stock exchange and any interested person may buy the shares on the floor of the exchange. There is no limit to the number of shareholders they may have. Companies like Vodafone, Unilever, Nigerian Breweries, PZ, Microsoft and Apple are public companies.
- Franchises - A franchise is a right sold to you by another business (the parent company) to sell the parent company's goods and/or services or engage in the business of the parent company in a specific area. Franchises are mostly found in quick service restaurants.
- Limited liability - is a form of business protection for company owners and some limited partners. In a limited liability company, the maximum amount that an investor or shareholder can lose in the event of the business becoming bankrupt is the capital/money he invested in the company - this is the limit of his liability.
In which business should you operate?
In which business should you operate? Do not be envious or simply join the bandwagon. The best option is to look before you leap. Choose a business that you are not only interested in but have some skill, expertise, experience or resources. Do some background check, study, feasibility or engage a reliable consultant. Businesses are dynamic and not equivalent to mathematics. Otherwise you could be making costly mistakes that you could have avoided.
And The Winning Type of Business Is...
The business in which you have the passion, training, experience, resources, dedication and commitment, demand and market, support and that gives you the desired profit.