Business Definition

A business (entity) is an organization or any other entity engaged in commercial,

professional, charitable or industrial activities. It can be a for-profit entity or a not-
for-profit entity and may or may not have a separate existence from the
people/person controlling it.
A business (activity) is a commercial activity which involves providing goods or
services with a primary motive of earning profits.
Objective Of The Business
The business objective is what makes the business go on and conduct its activities
in a long run. It is the reason why the business exists. While most of the people
argue that profit making is the core objective of every business. Few have come up
with the new underlying objective.
According to the traditional concept, business exists only to earn profits by
providing the goods and services to the customers.
Types of Businesses
There are many types of businesses, however, the main types are:
1. Retailers A grocery store is an example of a retailer. Retailer a business that
purchases goods from a wholesaler and sells them to consumers, the final
buyers of the goods
2. Service This type of business deals in selling intangible goods to the
consumers. Unlike tangible goods, services cannot be stored or separated
from the provider. Service firms offer professional services, expertise,
commission-based promotions, etc. Examples include salons, schools,
consultancy etc.
3. Merchandising is a middlemen business strategy where the business buys
products from a manufacturer, wholesaler, or other partners, and sells the
same at the retail price. It is usually known as a ‘buy and sell’ business as
they make profits by selling the products at a price higher than their cost
price. Examples of a merchandising business are grocery stores,
supermarkets, distributors etc.
 4. Sole Proprietorship: The simplest type of business. Sole proprietorships are
owned and operated by a single person and are very easy to set up.
5. Partnership: A business owned by two or more people who share
responsibilities and profits.
6. Limited Partnership: A business partnership, often between business
operators and investors.
7. Corporation: A type of fully-independent business with shareholders. One
of the most complex business types.
8. Limited Liability Company (LLC): A mixture of a partnership and a
corporation, designed to make it easier to start small businesses. One of the
most popular business types for startups.

Characteristics of Business
 Economic Activity: Business is an economic activity, as it is conducted
with the primary objective of earning money, i.e. for an economic motive.
 Production/purchase of goods and services: Goods and services are
produced or procured by business entities, so as to add value and sell them to the
consumer. Goods are either manufactured by the company or procured from the
supplier, with the aim of selling it further to the consumer, for profit.
 Selling of goods and services: Business must involve the transfer of goods
to the customer for value, through selling, meaning that if the goods are acquired
for personal consumption, then the transaction will not amount to business
activity.
 Continuity in dealings: Every business requires regularity in transactions,
i.e. an isolated transaction of exchange of goods or services will not be
considered as business. So, to constitute business, the dealings must be carried
out on a regular basis.
 Profit earning: The basic purpose of business is to make the profit from its
activities. It is the spine of business, which keeps the business going, in the long
term.
 Element of risk: Risk is the key element of every business, concerned with
exposure to loss. Efforts are made to forecast future events and plan the business
strategies accordingly. However, the factors that affect business are uncertain
and so does the business opportunities, which can be a shift in demand, floods,
fall in prices, strikes, lockout, money market fluctuation, etc