Understanding the different types of business is a fundamental step for anyone interested in how companies operate, grow, and evolve.
This topic is central to programmes in the area of business at Universidad Europea such as the Master in Business Administration in Madrid, the MBA in Valencia, or the Master in Business Analytics—programmes designed to deepen your understanding of business strategy, structure, and decision-making in real-world scenarios.
In this article, we explore the main ways businesses are classified—by size, sector, legal structure, and ownership—along with practical examples to help clarify each category.
What is a business?
Before exploring the different types of business, it's important to understand what a business actually is. A business is an organisational unit that produces goods or services for profit or for social purposes. It mobilises resources, human, material, and financial, and makes strategic decisions that affect its daily operations and long-term sustainability.
Different types of business by size
Business size is typically measured by the number of employees, revenue, and total assets:
- Micro-enterprises: Up to 10 employees, turnover below €900,000. Example: a local bakery.
- Small businesses: Up to 50 employees, turnover under €10 million. Example: a dental practice.
- Medium-sized businesses: Up to 250 employees, turnover under €50 million. Example: a regional manufacturing company.
- Large enterprises: More than 250 employees and turnover over €50 million. Example: a multinational tech firm.
Different types of business by sector
Companies can also be classified by the sector in which they operate:
- Primary sector: Businesses that extract natural resources (e.g., agriculture, fishing).
- Secondary sector: Those that process raw materials (e.g., manufacturing, construction).
- Tertiary sector: Companies offering services (e.g., education, finance, tourism).
Different types of business by legal form
A company’s legal structure determines its liability, ownership model, and administrative obligations:
- Sole trader (self-employed): One person owns and manages the business. Full personal liability.
- Limited company (SL): Capital is divided into shares. Liability is limited to capital contributed.
- Public limited company (SA): Larger businesses seeking external investment through shares.
- Limited partnership: A mix of general and limited partners with differing liability levels.
- Cooperative society: Owned by members, focused on shared goals and democratic decision-making.
- Community of property and civil partnerships: Less formal arrangements, often used for shared ownership or small ventures.
Other business classifications
Additional ways to distinguish the different types of business include:
- By capital ownership: Public, private, or mixed enterprises
- By geographical scope: Local, national, or multinational operations
Understanding the different types of business is essential for navigating today’s complex and competitive markets.
Whether you're interested in entrepreneurship, strategy, or data-driven decision-making, these classifications form the foundation of business knowledge. To take this further, Universidad Europea offers a portfolio of master’s programmes in business and technology equipping future professionals with the tools to lead and innovate across all sectors and business models.