What Is Business?
The word “business” is broadly used to refer to any activity undertaken in the pursuit of wealth. It is a combination of activities and processes involving the production and exchange of goods, services and money. It is different from profession and employment as it includes an element of risk, uncertainty and speculation. Business can be classified into many areas including agriculture, manufacturing, telecommunications, banking and insurance. It also encompasses activities that are not necessarily related to the production and exchange of goods like philanthropy, religion, love and affection etc.
The main objective of business is to make available products and services to the society in exchange for a price. The products and services are offered to earn profit and acquire wealth which is the main motivation behind a business. Basically all the activities that a person pursues in order to earn a living are considered as business. A vegetable seller, a bookstore owner, a rice mill or dal mill owner are all businessmen. The scope of business is also enlarged to include the production and sale of electricity, water and gas.
A small business is usually owned and operated by one individual and is known as a sole proprietorship. In this type of business, the owner takes on all the risks and liabilities for the operations of the company. He or she may hire employees but is otherwise responsible for all operating costs. A business can also be incorporated as a partnership or an LLC. In a partnership, the owners share the profits and liabilities equally while in an LLC, the owner holds personal assets such as bank accounts separate from the assets of the business.
As a business, it is essential to have sufficient funds to cover day to day expenses and to sustain growth. The finance function aims to raise the necessary funds from various sources like banks and investors. These finances are needed to purchase raw materials, trading goods and fixed assets like buildings and machinery. Large businesses have centralized procurement departments or divisions that procure raw materials and trading goods from larger distributors.
Another important function is planning. This includes analyzing the market and creating a strategy to meet customer demands. In addition, it involves forecasting the future needs of the business and deciding what resources are required to achieve the goals and objectives. It is also the responsibility of the management to create a business plan that will be effective in the long term.
A successful business must be able to compete in the market and win customers over. This is achieved by delivering high quality products and services. This can be done by offering competitive prices, creating a unique value proposition and providing customer support. It is also essential to have a good website and social media presence. It is also advisable to use marketing techniques such as PPC, SEO and content marketing. Finally, a successful business must have a clear vision and mission statement that will guide the business in achieving its goals.