Do you want to open a business? One of the first steps is to define what type of trade you want to make. Freedom, independence, support from a network, expertise from a leading brand, … The different types of business each have their advantages and disadvantages. Here is an article to help you see more clearly!
Reminder: What is a Business?
A business is an enterprise or establishment whose main activity is the sale of products or goods to customers. The objective of this operation is to earn financial profit for the capital gains received between the transaction of purchase and sale from the suppliers. The Commerce Act is defined by Article L110-1 of the Commercial Code and deals only with movable property. It is subject to commercial law and comes under the Register of Commerce and Companies.
A trade is managed by a trader, whose position varies according to the particular type of trade as well as other elements. It may belong to different sectors, here are some business ideas: food, ready-to-wear, bookstore, sports equipment, leisure, toys, aesthetics, etc.
Main types of business
integrated business
Also called a branch, integrated commerce is characterized by a network of points of sale belonging to a financial group, a family group, or different shareholders. The head of the network has several points of sale through which he distributes his products. Each point of sale (subsidiary or branch) is managed by a group employee.
Benefit
- Control of prices and business processes
- centralized team management
- parent company expertise
Harm
- very important financial investment
organized independent business
Organized independent trading combines both the independence of the trader and the support of a group or network. Unlike integrated commerce, organized independent commerce relies on independent merchants running outlets. The latter manage their own businesses (relatively) independently, respecting the rules imposed by the group. There are two main forms of organized independent businesses.
suffrage
It is a contract concluded between a company (franchisor) and an independent (franchisee). It allows the franchisor to exploit the concept, brand, or information on selling products or services in exchange for financial compensation paid to the franchisor.
Benefit
- Benefit from Franchise Notoriety
- Take advantage of the franchisor’s support and tools
- less merchant isolation
Harm
- Limited freedom from complying with franchise network practices
- Significant investment for entry fees
co-operative and allied business
It is a group of independent traders in the form of a co-operative in which all of them are equally shareholders. It is also known simply as “affiliate business”. The goal is to centralize and pool the means of multiple independent traders (purchasing, communication, processing, etc.).
Other types of organized independent businesses exist such as brand licensing or partnership, concession or commission-affiliation.
Benefit
- pooling of resources and resources
- maintain independence
- less isolation
Harm
- Significant investment (membership cost, time devoted to cooperative management, etc.)
independent business isolated
It is related to a freelancer who starts alone and generally opens small or medium sized business. He does not belong to any network, group or brand and manages his business independently.
Benefit
- great freedom in decision making
- Flexible and adaptable management
- Low construction and management costs
Harm
- Solitude
- Significant communication effort in a start-up
- No economic benefit (group purchases, marketing tools, communications, etc.)
What is the legal status of opening a business?
Choosing a legal status to open a business is a very important step. Apart from other factors (personal, tax, social,…), it is also based on the type of business you are going to start.
An organized independent business may be forced into one legal form by the parent company rather than another, whereas an independent trader would be free to choose a position to open his business.
questions to ask
What are the three most common forms of commerce?
The three most common forms of business are: isolated independent trade, organized independent trade, and integrated trade.
What is the legal status of opening a business?
The choice of legal status depends on the type of business, your personal situation, tax and social consequences, etc. This is an important decision.
What Kind of Business for a Local Business?
It all depends on your project. A local business is often an independent business, a franchise or a business integrated into a larger brand.