Production facilities can be built to supplement the available quantity of trade goods, especially when Hanse population grows so high that simply buying and selling goods from town to town is no longer enough to satisfy the needs of their citizens.
Businesses require a significant investment, both in time and resources. This makes them less desirable early in the game, where investing in ships will provide more profits and much more quickly.
The number of businesses that can be built in a single town appears to be limited due to a bug. discussion
There are several factors that affect the efficiency of production facilities.
Multiple production facilities of the same type in a city receive a production bonus. They produce more goods (and consume more raw materials) in the same time period, and at the same operating expense (thus lowering their average production price):
3 facilities: 3% bonus
6 facilities: 6% bonus
9 (or more) facilities: 10% bonus (there is no increase beyond that)
Production receives a 25% penalty for goods that are listed under the Production (low) column on the city information list. Such businesses continue to have the regular operating expenses, while they produce less goods in the same time period.
Agricultural businesses receive a penalty between December and February (33% for Grain Farm, and 50% for Hemp Farm, Winery and Apiary).