Line Of Business or LOB indicates the products or services a business or organisation offers for a specific business requirement or customer transaction. For example, a manufacturer might claim that its line of business is retail electronics if it manufactures computers, smartphones, and other relevant electronics.
What is your line of business? If you are thinking of the same query as a business owner, this guide can help you determine the line of your business. Additionally, you will learn about the line of business in banking, insurance, and other sectors.
Let’s check out how determining your business line can help you grow.
Importance of Line Of Business
A line of business or LOB is significant to every business offering diverse products or services to clients, customers, etc. Why is an LOB important for your business? The following 4 reasons will help you discover why LOBs are useful in businesses:
- Enhances the agility of a business
- Integrates multiple strategies of a business
- Promotes business growth
- Optimises customer experience
A line of business keeps the life cycle of a specific product or service on the required track. After all, lines of business let you supervise high-level collaborations. The product or service proceeds with changes, adaptations, and life-cycle stages. And, a line of business can contain key information about the product or service development process.
Line Of Business: Examples & Definitions
A Line of Business mostly contains 5 major elements. They are the product type, customer needs, size, brand, and channel. If you are looking for LOB examples, then we got you covered. Here are some examples of Lines of Business with definitions:
Consumer Banking
Consumer banking connects with banking products for individuals, such as loans, mortgages, credit cards, bank accounts, and more. This line of business is also termed retail banking or personal banking.
Remember, consumer banking is meant for individuals to manage and deposit their money and access their credit, not for businesses. On a related note, consumer banking has its categories based on size. The most common types are Commercial Banks, Cooperatives, and Credit Unions.
Small Business Banking
This is another line of business in banking. Small business banking offers funds for small and medium organisations. In other words, different types of firms can get financial support from such a line of business. Here are a few reasons why small business banking is significant in society:
- Small business needs a checking account that gains interest.
- In addition, small business banking should facilitate mobile banking access.
- Small business banking keeps accounting simpler and more efficient.
- Small business banking offers a business credit card for small and medium-sized enterprises.
- On the other hand, the treasury management process of small business banking delivers a comprehensive perspective of all businesses’ finances while using multiple vendors.
Property & Casualty Insurance
This particular line of business in insurance offers insurance for businesses and individuals. It includes properties like homes and automobiles. In other words, property insurance covers properties you or your business owns, whereas casualty insurance aids liability coverage to protect you if you coincide with a legal accident.
A few examples of property and casualty insurance are as follows:
- Car insurance
- Homeowners Insurance
- Renters Insurance
- Landlord insurance
- Power sports insurance
- Condo insurance
Remember that this type of business doesn’t cover life, health, or fire insurance.
Mergers and Acquisitions
This is a line of business provided by investment banks. Investment banks generally advise clients regarding legal structure, financing, valuation, taxation, capital structure, and other considerations.
In addition, here are the structure of mergers and acquisitions:
- Horizontal merger
- Vertical merger
- Market-extension merger
- Congeneric mergers
- Conglomeration
- Consideration mergers
- Product-extension mergers
- Purchase mergers
Retail Brokerage
Retail Brokerage is another example of a line of business. This allows individual investors to purchase securities like stocks. Additionally, retail brokerages sell extra financial products and securities such as mutual funds, real estate investment trusts, limited partnerships, etc.
Reinsurance
Reinsurance is a category of insurance that a company purchases from another company to protect itself from the risk of an accident. This line of business sells insurance to other companies. Here are the benefits of reinsurance are as follows:
- Companies can transfer or share particular risks with other companies.
- Additionally, reinsurance allows companies to get new clients and discard the requirement to raise extra capital.
- Moreover, it can help manage capital by freeing up additional capital for companies.
- Organisations can receive more profit by buying insurance. The premium can be less than the company collects from its policyholders.
- Finally, experts from insurance companies can guide companies in claiming benefits and more.
Wealth Management
Individuals with high net worth rely on this type of line of business. Wealth management is money management as well as an investment advisory service. This line of business example provides suitable solutions for prosperous clients.
How do these wealth management firms make money? Well, they gain profit by charging their clients for specialised services. Mostly, high-net-worth and ultra-high-net-worth individuals are clients of such wealth management firms.
However, you can find the following 3 types of wealth management firms:
- Coaches or planners
- Customised traders
- Product vendors
Large Accounts
An internal department of an enterprise can also be a line of business. For example, large accounts can be considered a line of business in a software development company. Additionally, this line of business is responsible for managing sales and service to particularly large customers.
Customers might require customised services or support from a software company. Here, large accounts refer to the most important accounts of the concerned company.
Retail Electronics
With the rise of electronics, this line of business application plays an important role. As a part of the retail line of business examples, electronic retailers offer the following products and services:
- Mobile phones
- Wearables
- Appliances
- Computers, scanners, printers, and their repair services
- laptops and tablets
- Set-top boxes, televisions, monitors, and so on
Insurance
Apart from the property and casualty insurance line of business, you can consider another prime insurance LOB. This type of line of business offers life and health insurance to individuals. Customers can contact the specified insurance companies if they need assistance regarding insurance.
How to Determine a Line of Business?
As a business owner, you should mention your line of business in official documents. First, try to define the sector you are going to work in. For instance, you must operate in banking or finance if you are about to provide loans. However, the LOB will be retail if you sell items online.
So, define your line of business to target your customer base properly. On the other hand, you can call a line of business a branch of business, a field of operation, a sector of industry, and more. Hence, don’t get confused and pick up yours from the above-mentioned line of business examples.
