Business: means any business in which goods or services are produced and/or sold to customers for profit. It is divided into three main types:
1. Production business means having materials or goods and putting them together to make a product. Two things are necessary for production:
· Knowing which materials (raw or processed) to use for making the product,
· Knowing how to collect materials together to make a product that called a process.
One simple product is bread. Production does not need to be big or complicated to make a profit. For example, someone who knows how to make good-tasting bread for a fair price should be able to find customers. Most people eat bread every day.
Some products need many materials and complicated processes. An example of more complicated production is a motorbike. Compared to bread production, motorbike production has more complicated materials and process. Parts of the motorbike are produced separately by different production businesses. For example, the tyres are bought from some business that produces tyres. The engine is bought from some other business that produces engines. The motorbike is then put together from the parts.
Small production can be handled by one person. For example, someone may weave baskets every day and spend one day of the week selling them. Big production can have a factory with a production line for products and many people employed for different jobs.
You could think of producing almost anything. A creative mind can invent new ways of putting together materials and processing them.
One creative production example is from Ghana. People are making bicycles out of bamboo plant. The bicycles are locally made, strong and eco-friendly. Business is doing well.
Another creative production example is from Tanzania. People are processing recycled plastic waste to produce plastic planks which are strong and durable for construction works. Within one year, the business has so many orders that they cannot produce enough planks for all the customers. The employer is now building a new factory and employing more people to increase production.
2. Trade business: means buying goods cheap and selling them to customers for more money. The difference between the buying price and the selling price brings income. Part of that income is used to pay business expenses, such as rent, transport, taxes and business phone calls. The remaining part of the income is business profit.
Trade can be profitable if the business idea is good. Some goods can be bought cheap from wholesalers, meaning that you buy the goods in big quantities for a cheap price. The same goods can then be sold in retail, meaning that you sell the goods in small quantities for a more expensive price.
An example of trade business is a fruit stall. Mangos, starfruits, guavas and pumpkins are bought directly from farmers. The buying price per one fruit is cheap because the farmer sells fruit in big quantities. The fruit stall sells them in small quantities for a higher price per fruit. Not all the fruit can be sold for profit, however. Some fruit is not sold and it will spoil. This will be loss for the fruit stall. If trade business is done with goods that will not spoil, such as rice, it is possible to buy very cheap when there are lot of people selling rice. Then it will be possible to sell for a better price later when less people are selling rice.
3. Service business: means selling something that is not products or goods. For example, someone may offer to give private lessons in English or Math and ask money for it. Someone else may offer to cut people’s hair and make hairdos. Restaurants, hotels and taxis are other examples of service businesses. Like for other types of businesses, it is important for a service business to know how to set the price.