Business is an organised commercial activity that revolves around the monetary motive and involves an element of risk or loss. Whether the business is an individual with a side hustle or a massive corporation with hundreds of employees, it exists with a motive to earn profits and a commitment to satisfy its customers’ needs.
There are several features of business that make it distinct from other occupations and activities. These include the purpose of the enterprise, its ownership, liability and management.
Firstly, the purpose of the enterprise is to produce and deliver goods and services that are desired by society. These can be physical goods (e.g. eatable goods) or intangible goods, such as assistance, advice and labour.
In the case of tangible goods, a business may manufacture them themselves and sell them directly to customers, or it may purchase products from suppliers, add value to them and then distribute them. Examples of this type of business are automobile manufacturers, food producers and clothing retailers.
The other common feature of businesses is that they sell their goods and services to customers, rather than simply providing them for free. This is known as distribution, and it includes the sale of physical goods to retail outlets or other businesses and the sale of services to customers, such as legal advice firms, courier and transport companies.
Businesses are generally divided into three sectors: manufacturing, service and hybrid businesses. In each sector, a business carries out one or more of these activities at any given time.
Manufacturers and service providers often combine both of these types of business together, for example, a restaurant might produce its own recipes and also buy cold drinks from PepsiCo and serve them to its customers. These two business types are called “manufacturing-merchandising”.
Another common feature of business is the way it uses resources. It involves a commitment to use assets, such as machinery and raw materials, efficiently and effectively.
This commitment is what makes the difference between a successful enterprise and a failed one.
Profit is the main objective of every business and it has to be achieved on a regular basis or the business will die.
The concept of profit is not confined to the monetary realm, but can be anything a company deems rewarding and which it wishes to offer to its shareholders and members.
In addition to achieving profits, business is also focused on a number of other objectives. These include creating and satisfying a customer, building customer loyalty, maintaining a positive brand image, and generating new business.
Lastly, a business must have a clear vision and mission. These goals are critical to ensuring the success of the enterprise, and should be based on a deep understanding of its target audience and customer needs.
The organisation of a business is a complex process that requires careful consideration of numerous aspects. It is therefore essential to establish definite and clear-cut objectives in each functional area of the business, such as production, marketing, financing, personnel, research and development and other important areas that are essential for the survival and growth of the enterprise.