How does a company work?

Nowadays, many entrepreneurs have plans to start a business. However, the principle of all companies remains the same. They can be created under different legal forms. However, there are some that produce goods for the purpose of selling them. Others offer services and receive remuneration for the services they provide. Alternatively, companies may prefer to buy goods in order to resell them. In order to understand how a company works, we will consider these types one by one.

Production company

These companies transform raw materials into finished products. It is the case of the food-processing companies. This transformation process requires the use of state-of-the-art machinery and the respect of certain standards. The products can be supplied by different suppliers. However, it is also possible that the transformation process is traditional and therefore carried out by man. After processing, the raw material no longer has its original appearance, but is replaced by a completely different product capable of meeting a specific consumer need.

Service-provision company

For these companies, it is not a question of selling goods but of providing skills to carry out a precise task. Insurance companies, for example, are part of this group. They provide insurance services without the service being directly consumed or used by the person concerned. The services may require a technicality as in the case of the activities of transit and maritime consignment. Unlike a production company, people are the main actors of such a company. Indeed, they are the ones who canvass the customers to obtain a market allowing the company to make profits.

Company for resale

In the event that the funds are insufficient for the creation of a company, there is another alternative open to entrepreneurs. It is to buy products from a producer and resell it at a higher price. However, this system requires a thorough market study to ensure the return of the investor's funds. The funds were raised to acquire the goods for resale and if no consumer is interested, the company will not be able to make a profit. On the contrary, it will lose money because it will have to sell the products at a lower price.

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