Business is the organized activity of providing goods and services to consumers in exchange for profit. It is the main driving force behind most economic activities. Businesses can be found in a variety of sizes and types, from individuals selling flowers out of their trunk to massive corporations such as Apple or Walmart. They can also be classified according to their legal structure and industry. However, all businesses have one thing in common – the pursuit of profit.
The most common type of business is the service enterprise, which provides intangible products or services to customers. Examples include legal advice firms, consultancy agencies and providers of courier and transportation services. These are considered service businesses because they do not offer tangible goods that can be stored or separated from their providers, unlike goods which are produced in manufacturing businesses.
Manufacturers buy raw materials and machinery to produce goods that they then sell either directly to consumers or through retailers. They can also buy already-produced goods and add value to them before reselling them. Examples of manufacturing businesses include automotive companies, wine producers and steel factories.
Retailers buy and sell goods to end users, such as clothing stores, electronics dealers and grocery chains. They can also buy and resell used goods, such as cars and furniture. A retail business can be categorized by its product range, market segmentation and distribution channels.
Financial businesses offer loans and credit, such as banks, credit unions and credit card companies. They can also invest and manage assets on behalf of investors, such as mutual funds, private equity firms, real estate investment trusts and asset management companies. Business can be categorized by its revenue streams, which can consist of interest income, fees and commissions, or sales income, such as rent from property or payments for advertising space.
A company that offers both manufacturing and retailing is considered a hybrid business. For example, fast-food chain KFC produces its own food recipes and distributes it through its stores, but also buys cold drinks from PepsiCo to sell to its customers.
An individual who practices a business may be called an entrepreneur or an independent contractor. The former takes on all the risks and rewards of the venture, while the latter is paid according to his or her assessment of the value of the work performed.
Starting a business requires careful planning and market research. It is also necessary to have adequate financial resources, as the costs of setting up and running a business can be high. Moreover, it is essential to determine the legal structure of the business and comply with local laws and regulations. It is also advisable to have a business plan, which will help the entrepreneur map out his or her goals and how they will be achieved. A good business plan can attract investors and give a competitive edge to the firm. It can also be useful when applying for loans from banks or NBFCs.