Characteristics of Business
The following are the characteristics of business
- 1. An Economic Activity: A business is an economic activity that includes the purchase & sale of goods or rendering of services to earn money. It is not concerned with the achievement of social and emotional objectives.
- Manufacturing or Procurement of Services and Goods: Before offering goods to the consumer for consumption they should be manufactured or procured by businesses. Business enterprise converts raw materials into finished goods. Organizations also procure finished goods& services from the producers to meet the needs of the customers in the market.
- Exchange of Sale of Goods and Services: Every business activity includes an exchange or transfer of services and goods to earn value. Producing goods for the goal of personal consumption is not included in business activity. So, there should be a process of selling or exchanging goods or services between the seller and the buyer.
- Dealings With Goods and Services daily: Every business, rendering either services or goods should deal daily. A one-time sale is not considered a business activity.
- Profit Motive: Profit is an indicator of the success and failure of the business. It is the difference between the income and expenses of the business. The primary goal of a business is usually to obtain the highest possible level of profit through the production and sale of goods and services. It is a return on investment. Profit acts as a driving force behind all business activities.
- Uncertainty of Return: The possibility of earning profit or loss is very uncertain and can’t be anticipated by the entrepreneur. Hence, no business can do away with risks.
- Customer Satisfaction: Profit is a business’s main goal and can only be achieved if customers buy the goods and services they sell. Successful businesses constantly monitor customer satisfaction and adjust things like price or quality as needed. Satisfied customers become regular customers and often produce more customers through word of mouth.