Business is an economic activity that involves the exchange, purchase, sale, or production of goods and services with a motive to earn profits and satisfy the needs of customers. It can be profit or non-profit organizations that function to gain profits or achieve a social cause respectively.
Characteristics of Business
- Economic activity: It is an economic activity of the production and distribution of goods and services. It provides employment opportunities in different sectors like banking, insurance, transport, industries, trade, etc. it is an economic activity corned with the creation of utilities for the satisfaction of human wants. It provides a source of income to society. It results in the generation of employment opportunities thereby leading to the growth of the economy. It brings about the industrial and economic development of the country.
- Buying and Selling: It involves buying raw material, plants, and machinery, stationary, property, etc. On the other hand, it sells the finished products to the consumers, wholesalers, retailers, etc. It makes available various goods and services to the different sections of society.
- Profit Motive: Profit is an indicator of the success and failure of the company. It is the difference between the income and expenses of the firm. The primary goal of an organization 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.
- Risk and Uncertainties: The possibility of earning profit or loss is very uncertain and can’t be anticipated by the entrepreneur. Hence, no business can totally do away with risks.
- Legal and Lawful: No matter, in which type of business the company is engaged in, it should be legal in the eyes of the law, or else it will not be considered as business.