7 Types of Commercial Business You Should Know
Are you interested in starting a commercial business? Do you want to know the different types of commercial business that exist? If yes, then this article is for you. In this article, we will explain what a commercial business is, and the seven main types of commercial business that you can choose from. We will also give you some tips on how to start and run a successful commercial business.
What is a Commercial Business?
A commercial business is a business that sells goods or services to customers for profit. A commercial business can operate in various sectors, such as retail, manufacturing, hospitality, transportation, etc. A commercial business can also be classified according to its size, ownership, legal structure, and market orientation. There are many types of commercial business, but we will focus on the seven most common ones. These are:
1. Sole Proprietorship
This is the simplest and most common type of commercial business. A sole proprietorship is a business that is owned and operated by one person. The owner has full control over the business and is personally liable for its debts and obligations. A sole proprietorship is easy to start and has low tax rates, but it also has limited resources, growth potential, and legal protection.
2. Partnership
This is a type of commercial business that is owned and operated by two or more people who agree to share the profits and losses of the business. A partnership can be general or limited, depending on the level of involvement and liability of each partner. A partnership has more resources, skills, and flexibility than a sole proprietorship, but it also has more complexity, conflicts, and risks.
3. Corporation
This is a type of commercial business that is a separate legal entity from its owners. A corporation is owned by shareholders who elect a board of directors to manage the business. A corporation has many advantages, such as limited liability, perpetual existence, easy transfer of ownership, and access to capital markets. However, a corporation also has disadvantages, such as high tax rates, strict regulations, and loss of control.
4. Limited Liability Company (LLC)
This is a type of commercial business that combines the features of a corporation and a partnership. An LLC is owned by members who have limited liability for the debts and obligations of the business. An LLC has more flexibility, simplicity, and tax benefits than a corporation, but it also has more paperwork, fees, and limitations than a partnership.
5. Cooperative
This is a type of commercial business that is owned and operated by its members for their mutual benefit. A cooperative can be formed by consumers, producers, workers, or any other group of people who have a common interest or goal. A cooperative has advantages such as democratic control, social responsibility, and cost efficiency. However, a cooperative also has challenges such as lack of capital, motivation, and expertise.
6. Franchise
This is a type of commercial business that involves a contractual relationship between a franchisor (the owner of a brand or concept) and a franchisee (the operator of a branch or outlet). A franchise allows the franchisee to use the franchisor’s name, logo, products, services, and systems in exchange for a fee and royalty. A franchise has benefits such as brand recognition, training, support, and proven success. However, a franchise also has drawbacks such as high costs, strict rules, and dependency.
7. Social Enterprise
This is a type of commercial business that aims to achieve both social and financial goals. A social enterprise can be a nonprofit or for-profit organization that uses innovative strategies to address social or environmental problems. A social enterprise has advantages such as social impact, customer loyalty, and employee engagement. However, a social enterprise also has challenges such as balancing mission and profit, measuring performance, and scaling up.
Tips for Starting and Running a Successful Commercial Business
Now that you know the different types of commercial business that you can choose from, here are some tips on how to start and run a successful commercial business:
– Conduct market research: Before you start your commercial business, you need to understand your target market, customers’ needs and preferences, competitors’ strengths and weaknesses, and industry trends and opportunities.
– Choose your niche: After you conduct market research, you need to choose your niche,
which is the specific segment or area that you want to focus on in your commercial business.
Your niche should be something that you are passionate about, knowledgeable about, and skilled at.
Your niche should also be something that has enough demand, low competition, and high profitability.
– Write your business plan: Once you choose your niche, you need to write your business plan, which is a document that outlines your goals, strategies, and actions for your commercial business.
Your business plan should include sections such as executive summary, company description, market analysis, products or services, marketing plan, financial plan, and appendix.
Your business plan should be clear, concise, and realistic.
– Register your business: After you write your business plan, you need to register your business, which is the process of obtaining the legal permission and recognition to operate your commercial business.
You need to choose your business name, legal structure, and location, and then apply for the necessary licenses, permits, and registrations from the relevant authorities.
You also need to open a business bank account and obtain a tax identification number.
– Launch your business: Once you register your business, you need to launch your business,
which is the process of introducing your commercial business to the public and attracting customers.
You need to create your brand identity, which includes your logo, slogan, colors, and fonts.
You also need to create your online presence, which includes your website, social media accounts, and online directories.
You also need to promote your business, which includes advertising, networking, and word-of-mouth.
– Manage your business: After you launch your business, you need to manage your business,
which is the process of running and growing your commercial business.
You need to manage your finances, which includes budgeting, accounting, and bookkeeping.
You also need to manage your operations, which includes inventory, supplies, and quality control.
You also need to manage your human resources, which includes hiring, training, and motivating employees.
– Evaluate your business: As you manage your business, you need to evaluate your business, which is the process of measuring and improving your commercial business. You need to evaluate your performance, which includes tracking, analyzing, and reporting your sales, expenses, profits, and customer satisfaction. You also need to evaluate your strategies, which includes reviewing, adjusting, and updating your goals, plans, and actions. You also need to evaluate your opportunities, which includes identifying, exploring, and seizing new markets, products, services, and partnerships.
Types of Commercial Businesses and Their Global Demand
Commercial businesses are organizations or entities that engage in commercial, industrial, or professional activities. They can be classified by the physical space they occupy, such as offices, retail, industrial, leisure, and healthcare, or by the legal structure they adopt, such as sole proprietorships, partnerships, limited liability companies, and corporations .
According to a report by Savills Research, the global demand for commercial property has been affected by the COVID-19 pandemic, which has disrupted the normal operations of many businesses and changed the preferences of consumers and workers. The report shows that the demand for office space has decreased by 28% in 2020 compared to 2019, while the demand for industrial and logistics space has increased by 40% in the same period . The report also predicts that the demand for retail and leisure space will recover gradually as vaccination programs progress and social restrictions ease.
Some of the factors that influence the global demand for commercial property are:
– The level of economic activity and growth in different regions and sectors
– The availability and cost of capital and financing for commercial property investment
– The degree of digitalization and innovation in various industries and markets
– The environmental, social, and governance (ESG) criteria and standards that affect the sustainability and attractiveness of commercial property
– The demographic and lifestyle trends that shape the preferences and behaviors of consumers and workers
To succeed in the commercial property market, businesses need to adapt to these changing conditions and opportunities. They also need to conduct thorough market research and analysis to identify the best locations, types, and sizes of commercial property for their specific needs and goals.
References:
http://www.epra.com/media/EPRA_Real_estate_in_the_real_economy_infog1_1354797656783.pdf
https://www.jstor.org/stable/20782208
http://www.investopedia.com/terms/i/investmentrealestate.asp
https://corporatefinanceinstitute.com/resources/management/types-of-businesses/
https://www.savills.com/research_articles/255800/307467-0/world-office-demand-index–q4-2020
https://www.sba.gov/business-guide/launch-your-business/choose-your-business-structure
https://www.investopedia.com/terms/c/commercial-business.asp
https://www.entrepreneur.com/article/77912
https://www.forbes.com/sites/theyec/2018/04/10/how-to-start-a-successful-business-in-six-steps/?sh=3f0c1f7a4f1c
https://www.shopify.com/blog/types-of-businesses
