What Is a Business?
A business is an organization or enterprising entity engaged in commercial, industrial or professional activities. It can be for-profit or non-profit, with either its profits being returned to owners or re-invested in the company itself for growth and expansion. Businesses are varied in size, structure and type, ranging from small sole proprietorships to large international corporations. The common thread that binds all businesses is that they are in the business of providing goods and services desired by society in exchange for money.
Business is a complex and diverse area of activity, with the vast majority of firms being for-profit companies. Those that operate for profit have an overriding goal of making a financial return on their investment, whether the return is in the form of dividends paid to investors or an increase in market value of the firm, which can then be sold or bought by other entities. A company may also operate for a social or humanitarian purpose and be known as a not-for-profit, with its profits invested back into the community in the form of loans, grants or other support.
The word business comes from the Latin mercantilis, meaning “to trade”. Businesses exist to make and sell products or provide a service in return for money, thereby creating wealth for its owners and satiating consumers with their needs and desires. Businesses are also a major source of employment and provide the means for individuals to gain economic security through work.
Although many different forms of business are possible, there are three main types of legal ownership: sole proprietorships, partnerships and corporations. These differ in their operating structure, management and liability. The type of business a person chooses to operate will depend on his or her goals and preferences, as well as the available capital and resources.
Some businesses produce their own goods or services, while others buy and sell them. These are referred to as retailers and wholesalers. Other types of businesses include those that offer advice, consultancy or labour and those that provide courier and transportation services. Finally, some businesses deal in intangible goods that cannot be physically possessed or separated from their providers, such as financial services, advertising agencies and the provision of education.
One of the most important aspects of starting a new business is planning and research. This will help to determine the demand for your product or service and whether it can be successfully marketed. It will also help you to determine the necessary equipment, staff and marketing strategy required.
It is important to remember that even the best-planned business venture can be subject to change and risk. Therefore, it is essential to prepare for this by conducting appropriate market research and by putting in place suitable contingency plans.
A final point is that it is vital for business to take the lead on issues such as environmental and social sustainability, rather than continuing to be pushed onto the defensive. Otherwise, business will be perceived as a force that despoils the environment and undermines democracy.