Classification of Business Ideas Every Finance Student Must Know

Classification of Business Ideas
Every finance student plans on starting a business after completing his/her degree. Before starting a business, they need to understand its classification clearly. Also, they have to clarify what factors affect the profit rate. The information about this idea helps in reducing the chances of failure. In any business, you have to invest up to some extent. In small businesses, you invest on a small scale. Here the risk factor is also small. But still, it includes efforts, time, and money. No one wants to face failure in business. So to avoid this aspect, people need to have an idea about the classification of business. This is because it helps in facing ground realities, especially when writing a finance dissertation.

Actual business is an exchange of products for the sake of money. Without a good product supply, you cannot make your business future bright. Also, there are different classifications of the business ideas. Every business works for profit. No one wants to put efforts where they cannot have profit. You have to see which business idea is best suitable for you based on the classification. And which one can give you a high-profit rate.

Classification of Business Ideas

From a broader perspective, there are three classifications of business ideas. The first one is that of an innovative business idea. Second one is commoditising the business ideas. And last one is the mixture of innovation, and commoditising. It is termed as a hybrid business idea. Let's discuss each classification in detail;

Innovative Business Ideas

In innovative business idea, the risk factor is high. In this aspect, a finance student already gets the idea of risk factors. According to that risk, he has to put in efforts as well. The innovative business idea is for different gadgets. It includes smartphones, laptops, or computers. It also covers smart watches, and all other electronic devices.

Technology is getting advanced day by day. So electronic gadgets also face changes with time. Within this context, there are two scenarios that are related to innovative business ideas. You may have a rapid growth in your profit rate as well. Or you may have to wait for a long time. In this phase, investment is also increased. The reason behind this risk factor is that your product will be new in the market. So people may hesitate to trust it in the early stages. For this reason, you need to keep all these aspects in mind.

Commoditise the Business Ideas

This business idea is inclined toward services. Your main focus will be on the local needs of people here. For example, restaurants, cafes, and hospitals are the basic need of any society. Same goes for schools and mechanics as they are also basic needs of any society. All these local businesses come under the category of commoditising business ideas. In this business type, the risk factor is very small. It is insignificant enough to be neglected as well.

But in the same way, you need to understand that profit rate is also very small in this business type. This business idea facilitates you through a low-risk factor. But you have to compromise on profit rate in return. If you analyse it in the long term aspect, it’ll become the most successful business idea.

Hybrid Business Idea

This classification of business ideas works as a bridge between two businesses. It is just like working for the benefit of two parties. And resultantly, you make a portion of the profit for yourself. Let's take the example of some hybrid business ideas. These are highlighted as follows;

The first example is related to a business of import-export. Between two parties of importer and exporter, a middle one works as the hybrid. The middle party takes material from the exporter, and transports it to the importer. Both import and export parties have no direct link with each other. But both parties approach the middle part that helps both in their work. Same as different associations and corporations that work on the same business idea.

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There are many more ways for the classification of business ideas. It can be based on technology, or sectors. For example, high technology classification of business ideas, and low technology business ideas. It can be that of small entrepreneurship, or large entrepreneurship. You can also classify based on national, or international sector. In short, there are many classifications of business ideas. But above this, all the major classification is same. That is an innovative, commoditised, and hybrid business idea. Based on this classification, you can evaluate risk factors easily.

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