Business is a form of activity wherein people produce and exchange goods and services to earn profits. It is distinct from profession and employment as it involves an element of risk and uncertainty. Business is an economic institution that provides employment and income opportunities to millions of people across the world. It also produces products that are in demand and helps society meet its needs. Whether it is Coca-Cola, IBM or a small bakery shop, businesses come in all shapes and sizes. However, in all of these different forms, the most important feature that all businesses have in common is profit.
The word ‘business’ literally means ‘to be busy’ and in practice, it refers to the production, distribution and trading of goods and services for the purpose of earning profits. It also includes the buying and selling of raw materials for manufacturing goods. This activity is carried out by large corporations, government agencies and private individuals.
Besides the production of goods and services, business also deals with various other activities like finance, banking, insurance, advertising, warehousing, transportation and communication. In addition to these, there are certain responsibilities that all businesses have towards their stakeholders including customers, employees and the community at large.
To fulfil these responsibilities, every business must have a clear understanding of its objectives. A clear objective will provide a guideline as to how the business should function. This will help in achieving the desired results of the business and ensure that it is on the right track to reach its goals.
As per a well-known expert Derek F. Abell, a business should have the following six characteristics – Dealing in Goods and/or Services, Production (Manufacturing) and/or Exchange of Goods, Effective Utilisation of Resources, Creation of Customer Groups and Functions and Alternative Technology. These are the key factors that determine a successful business.
A business is all about earning profits, hence the main purpose of running a business is to survive and make a good profit. This profit will provide the capital to sustain the business in the long run and will help in increasing its turnover and sales. The more the profits are, the better it is for the business and its owners.
Another essential factor that defines a successful business is the satisfaction of its customers. This can be achieved by effective marketing and advertisement, delivering products as promised and providing good customer service. It is also important to find new uses for existing products and designs.
There are some other crucial elements that define a successful business like creating new markets, increasing the profitability of existing products, reducing the cost of production and improving the efficiency of employees. Businesses should also try to reduce their carbon footprint by switching to renewable energy sources and using recycled materials.
Lastly, all businesses should provide quality goods and services at fair prices. This can be achieved by implementing the right production processes, ensuring that the goods are safe and durable and making efficient use of available resources. It is also essential to understand the market conditions and changes in consumer demands to be able to anticipate any future requirements.