Functions of a Business
Business is a kind of economic activity where people exchange goods and services for money on regular basis. It is also referred to as trade, commerce and industry. It is the core of a modern economy. It encompasses all activities that are aimed at profit-making. It includes the activities of manufacturing, marketing, trading, shipping and transporting. It also includes the services like finance, insurance, advertising and banking.
The word business is derived from the Latin word ‘busy’. It means ‘to be busy with something, to engage in some activity or work’. It has been interpreted to mean ‘to earn money and to acquire wealth’. It is also defined as ‘any enterprise, organisation or set of activities that are engaged in for earning profit and wealth’. According to Peter Drucker, the fundamental purpose of a business is to create customers. The success of a business depends on how much the products and services meet the needs, wants, and demands of customers. This can be achieved by providing quality riched goods and services at reasonable prices.
Various functions are involved in running the business efficiently and effectively. The most important one is profit-making. The business will survive and grow only if it is able to make enough profits. These profits are used to pay the day to day expenses, maintain assets and to expand the business. In the absence of profits, the business will not be able to survive and it will soon go out of existence.
Another function is risk-taking. Every business has an element of risk and uncertainty associated with it. The risks can be in the form of demand changes, price fluctuations, floods, strikes, lockout, money market fluctuations etc. It is the job of the management to minimise the risk and uncertainties to achieve the objectives of business.
Personnel function deals with the human resource management of a business. It includes the recruitment, training and development of staff. It is also responsible for ensuring the effectiveness and efficiency of existing staff. It helps in attracting and retaining the right talent for the business. It also provides an opportunity for personal and professional development.
Finance function focuses on the financial management of the business. It includes the procurement and allocation of funds from different sources like shareholders, banks, investments, loans etc. It is also responsible for establishing a suitable financial system in the business and arranging for the availability of cash to fund its operations.
A business should have an appropriate name for itself. It should be clear, concise and descriptive. It should describe the nature of the business and differentiate it from its competitors. It should also be logical, meaningful and memorable. It should reflect the values and culture of the business and should be easily understood by the customers. A good name for a business will increase its credibility and will build its standing in the marketplace. It will be more attractive to investors. A good name will ensure long-term sustainability of the business.