Production facilities can be built to supplement the available quantity of trade goods, especially when the 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 when building ships provides greater and quicker profits.
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 modest 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)
There is a 25% production penalty on all goods that are listed under the Production (low) column on the city information list. While these businesses cost the same amount to operate, they produce less goods in the same time period.
From December to February, agricultural businesses receive a production penalty (33% for Grain Farm and 50% for Hemp Farm, Vineyard and Apiary).