What Are the 6 Types of Business Activities?

Regardless of their activities, the ultimate goal of any business is to maximize profits. Keeping
this in mind, there are six types of activities that all businesses have to undertake at some point
or the other.

1. Sales

The sales team is the lifeblood of every business. The sales team reaches out to the customers to
expand the customer base and secure repeat sales.

2. Marketing

Marketing and advertising help in developing the brand and boosting the exposure of the
business and its services.

3. Finance

Budgeting and finance help in deciding how the revenue is to be utilized for growing the
business and achieve optimum results.

4. Accounting

The process of managing the money that goes in and out of your business falls on accounting.
Keeping up to date with the expenditure and income allows you to ascertain where and how the
money is spent.

5. Customer Service

Customer service helps in securing new clients, build lasting relationships and promote referrals
for your business.

6. Human Resources

The human resources team is an essential part of maintaining current operations and planning for
expansion. They are responsible for conducting interviews, hiring applicants, dealing with
interpersonal conflicts and determining the benefit packages employees should receive.

Not every business activity is an operating activity. The principal operating activities include any
cash flows that relate to the core or activity that business performs to earn a profit.

The reporting of operating activities helps in determining the focus of the business and it’s
earning potential.
What Is Included in Operating Activities?

The operating activities of a business are found in the business’ financial statements particularly
the cash flow statement and the income statement.

The operating activities section in these statements is considered the most important section
since it provides cash flow information related to the daily operations of the business and allows
stakeholders to see the viability of the business. It also determines the business’ ability to pay its
current expenses such as labor costs and debt repayment.

The operating activities that result in revenue generation are:

 Cash receipts from sales

 Sales of shares
 Income earned from investment
 Settlements of lawsuits and insurance claims
 Accounts receivables collection
 Supplier refunds
The operating activities that result in cash outflows are:

 Employee payments
 Supplier payments
 Tax payments
 Refunds to customers
 Settlements of fines and lawsuits
 Interest to creditors
 Equipment purchase
 Interest payment on loans and dividends
In the statement of cash flows, the cash flow from these activities is listed in the operating
activities section. They are focused changes in the current assets and current liabilities and the
net income. Apart from operating activities, cash flow statement also lists the cash flow from
investing and financing activities.

What Is an Example of an Operating Activity?

Revenue-Generating Activities
What is the main cash-generating activity of the business? There are two primary revenue-
generating activities of businesses – providing services and selling products.

Marketing and Advertising

Operating activities include promotion and advertising of goods and services. For example, a tax
accountant might organize introductory training sessions for small businesses at the local
chamber of commerce.

Administration

Functions such as accounting, purchasing, human resources, purchasing, facility maintenance

and information technology are included under operational activities.

Maintenance and Customer Service

The related expenses of customer service and facilities maintenance include rent, utilities,
supplies, insurance and licenses.