Introduction
This will help us understand how businesses earn their money and provide services to contribute to society. A business is an organised activity where individuals and organisations will make, purchase or sell goods and / services in order to earn a profit. However, businesses will have many elements to them such as customer satisfaction, innovation, creating jobs and contributing to the economy.
It is therefore important for students, entrepreneurs, investors and anyone who would like to understand the business world.
What Is Business?
All lawful businesses produce, sell, distribute or trade goods and services. The main goal of businesses will normally be to make a profit for themselves by meeting the needs and wants of their customers.
For example, a clothes store will buy goods from manufacturers and sell them to customers at a higher price. Whereas a software company will create digital goods and sell them to businesses or individuals.
In both cases they will be carrying out business-related activity because they are providing a service for money.
Businesses can be of a large or small scale. Some will be local and some will serve customers from many different countries.
Main Objectives Of Business
All businesses have aims to achieve. Although making a profit is an important element, successful businesses will carry out many other elements.
1.Profit
The main aim of any Venture will be to make a profit. This means that they can pay for their costs, reward their investors and carry on running. Profits will allow businesses to grow and provide new products for their customers.
2.Customer Satisfaction
Venture will want to meet the needs of their customers. Providing quality products and reliable services will help build trust.
3.Economic Development
They will contribute to the economy by creating jobs, income and industries. This will ultimately improve quality of life.
4.Growth
Many businesses will want to grow their business by creating new products, entering new markets and improving their processes.
Types Of Business
There are 3 main types of business.
1.Manufacturing Business
A manufacturing business will make finished goods by converting raw materials into products.
Such as a furniture business will make tables, chairs and cupboards from wood and other materials. Whereas car companies will make cars for individuals.
2.Trading Business
A trading will buy finished goods from manufacturers or wholesalers to provide to customers. Unlike manufacturing businesses, they will not normally create their own products.
Supermarkets, clothing stores and electronics shops will be trading businesses.
3.Service Business
A service business will provide professional skills, help or facilities.
Examples will include solicitors, schools, hospitals, banks and consultancy companies providing services to individuals and organisations.
These are important as they all can provide what an individual may need.
Ownership Of A Business
Businesses can be categorised based on their owners. There are 4 main types.
Sole Proprietorship
A sole proprietorship is owned and run by only 1 person. This person will make decisions, run the business and receive the profits. However, they will usually be personally responsible for any debt.
Partnership
A partnership will have two or more people who have agreed to run the business together. They will usually share their roles, investment, profits and losses.
Corporation/Company
A corporation is a legal entity created under company law. This means that unlike a sole proprietorship it has its own legal identity. Shareholders usually have limited liability.
Limited Liability Company (LLC)
A Limited Liability Company has a mixture of elements from partnerships and companies. This allows owners to have limited liability whilst being flexible. However requirements will vary between jurisdictions.
Why Is Business Important?
Businesses are important as they benefit individuals, communities and the economy.
- Provide jobs: They employ staff helping to reduce unemployment.
- Provide goods and services: They provide goods and services needed in everyday life.
- Taxes: They contribute to the government through taxes and other lawful payments.
- Innovation: Companies will create new technology, products and solutions.
- International Trade: Businesses allow countries to trade with each other and promote Venture relationships.
- Improved Quality Of Life: They can help provide a better quality of life through income and economic activity.
What Is Business Management?
Business management is the organisation, planning, leading and controlling of a business. Helping businesses make the best of their resources. Improving employee performance. Assisting with decision making and increasing productivity.
There are 4 key elements of business management.
- Planning – Decide on your objectives and how to reach them.
- Organising – Organise resources, roles and tasks.
- Leading – Lead and motivate your employees.
- Controlling – Monitor your performance.
Having good business management can help businesses stay competitive.
Key Features Of A Business
Businesses will have many features.
- Economic – Involves selling or producing goods and services
- Profit – Usually try to make a profit
- Repeated – Usually involve regular transactions.
- Satisfy Customers – Meet customer needs.
- Risk – All businesses will involve risk of losing money and changes in the markets.
- Legal – Must abide by laws.
Note: Not all money related activities will count as a business. For example, if you sell something personal occasionally it will not count.
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Conclusion
A business is an organised economic activity that produces, distributes or trades goods and services. Although making a profit is key, businesses will create jobs, help with innovation, provide customer satisfaction and contribute to the economy.
If you wish to start a small shop, start up a company or work in management having an understanding of What Is Venture will give a solid foundation.
Ultimately to succeed businesses will need good management, provide customer satisfaction, abide by laws and have long term planning.
