Concept and Characteristics of Business

What Are The Characteristics of Business

The term business is concerned with the production and distribution of goods and services for earning a profit. It refers to all the economic activities carried out by individuals as well as different organisations for generating incomes. Some define business as a human activity focused on creating or obtaining wealth through buying and selling of services. However, some define the business as economic activities for earning income. Here, students will get to know about the concept and what are the characteristics of the business.

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The above picture shows that there are several characteristics of business depending from one organisation to another. However, the motive is the same, that is, to satisfy the particular needs of customers. 

Explain The Concept of Business

Derived from the word ‘busyness', the word 'business' means engaged in an activity. Business generally means buying something at a low price and selling it at a higher price. The margin produced between the high selling price and the low cost price refers to profit. The major objective of a business is to get profit. 

Business refers to any occupation that involves all certain activities linked with production or gaining of goods for sale. It includes the addition of profit margin to that costs for selling it to the clients to satisfy their needs. Generally, the business aims at a profit but focuses on satisfying the needs of the customers. The business includes every profession in which people are busy earning income using selling, producing, purchasing or exchanging goods. It aims to accomplish the needs of other people to gain a profit. 

Explain The Characteristics of Business

Characteristics refer to the crucial features which are essential to classify the business. Globalisation, change, government control, large size, information, competition etc. are some of the major characteristics of business activities. Other than these, it includes:

  • Trade of Goods and Services

If any business plans on selling a good or product, it has to either purchase or manufacture that product. It helps in adding a certain profit margin in the goods or services. Some of the services for sale include housekeeping, transportation and security. 

  • Economic Activity

One of the critical characteristics of business is economic activity. Any economy that offers a fiscal return refers to economic activity. These activities are mainly concerned with the distribution or production of goods and services. The objective of economic profit and the manufacture of utilities through the establishment of goods and services are its essential features. 

  • Continuity in Dealings

Business is a crucial economic activity that generates money. A single transaction of sale or purchase cannot be considered a business activity. Along with regulations, a business must be continuous in its dealings. Major features of a business organisation determine that businesses must continuously produce and sell products to customers for gaining high profits. One time dealing cannot be regarded as a business. 

  • Sale of Exchange of Products

After production or procurement, other features of business is to sell goods or services for the money. The way to sell a service or product is by introducing it in the market or to offer it for sale. Exchange or sale must take place between the buyer or seller. 

  • Profit Earning

The major purpose of business is the enhancement of earned profit. It enters the market with the major objective of gaining a profit. If any business cannot produce a profit, it’s expected to go down financially. That is why; a business person tries all the probable tricks to earn profits by decreasing the costs or improving the volume of sales.

  • Risk Factor 

Undoubtedly, the business attracts risks, and it’s well-said that the more the risks, the higher is the return. While starting the business, it’s never definite whether the business would be successful or not. A new business may even earn profit in this competitive world, but the amount of profit gained may differ.

  • Legal Activity

From the nature and concept of business, it can be said that every business should be lawful and legal. Business is an extremely vital activity for a country, but it’s not only about the law. The regulation of any country puts clauses on the working of the business to control its activities. 

Business is owned either by a single person or a group of individuals. Business owner offers capital and runs the business. Profit is a fundamental part of the business. The activities related to manufacturing as well as the distribution of goods and services are supported to make a profit. 

FAQs (Frequently Asked Questions)

1. What is a Business?

Business is the joint effort made by a group of individuals so that they can buy certain products and sell them to make a profit. These goods and services meet the needs of society. However, the business has three primary characteristics such as:

  1. All the individuals must work together as one for having successful results. 

  2. Business products must meet the needs of society.

  3. The business must make a good profit, seeking better development of society. 

2. State Any One Characteristic of the Business.

The most important characteristic of a business is to make a good profit. A seller must build a good relationship with the buyer for the exchange of goods. Thus, with more sale of the products, a business gets maximum benefits and earns a good profit. However, to run a business, it is also important to increase the product sale, which can reduce its cost and hence attract more and more customers for your product. Eventually, the motive is to make a good profit.