A business entity is an organization that uses economic resources or inputs to provide goods or services to customers in exchange for money or other goods and services.

There are three major business types:

Merchandising Business

This type of business will buy products at a wholesale price, and sell the same products at a higher price (retail price),this being the single way of making profit for those kind of businesses. They are also knows as “buy and sell” businesses.

They usually sell physical products, without changing their form. (For example : bread, milk, groceries, fish etc)

Service Business

This type of businesses sell intangible products (they have no physical form). Usually, they provide professional skills, courses, advice, expertise etc.

Example of services: schools, banks, hair salons, internet provider firms, law firms etc

Manufacturing Business

Manufacturing businesses buy products with the intention of using them in the production stage of another product that they will sell. This way, a manufacturing business will use labor, materials and production equipment to make products that will be sold to the customers, this being their way of making profit.


One last type are the hybrid businesses.

They cannot be classified under one business type, the best example of a hybrid business is a restaurant. It provides services for their client, sells beverages and turns raw ingredients into delicious meals.




James Martinez

Author James Martinez

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