With the definition of business clear by now, we move our focus to different features or characteristics of business, to understand more about it. Most of these characteristics describe almost every business we know of. Some of the most salient features of business include -
Business as an Activity to Promote Economic Causes
Almost all businesses which we see around us are driven by an economic purpose and are based solely to earn maximum profits. These businesses focus more on monetary returns and the satisfaction of customers via selling or exchanging products and services.
For example, a milk delivery website or company delivers milk to your doorstep every morning, in lieu of which they demand a delivery fee, which is then shared between the delivery executive and the company. Such companies earn profits via deliveries and also keep track of the goodwill among customers, which will fetch them more orders in the future.
A Business Should have Consistency in Earnings
Let’s say you have used your laptop or your personal computer for many years now and it has gotten slower with time. Now, you have accumulated some money to buy another new one, and so, you sell your older one to a person seeking an old laptop.
This action, though has generated an income, cannot be termed as a business as you won’t go on to sell old laptops regularly or on a daily basis. But the shop from which you buy your new laptop can be called a business, as that shop is probably a retail store and sells many laptops each day and hence, has a regularity in dealings.
Business as a Profit-Generating Organisation
Almost all businesses have one sole purpose - maximising profit. When a business is launched in the market, the individual or a group of individuals, who are its proprietors, initially comes up with an immaculate plan of providing products or services to its customers such that their earnings are high.
Any business which fails to derive revenues over a while is assumed to go bankrupt, and the business is declared null and void. So, earning high dividends while keeping in mind all other co-curricular costs involved is one sphere where all businesses spend most of their time on.
Businesses Always ply on a high-Risk Road
From the time of its inception, all businesses tend to suffer from a trade-off between high risk and higher returns. The more risk, the more the potential to earn more profit.
For example, there are thousands of start-ups right now in our country, all of which are trying to gain from different market demands. While a food delivery start-up depends on a customer base who order food online, an indigenous coffee-selling start-up relies on coffee purists and not on people who enjoy drinking tea more than coffee. Such customer bases can be volatile and subject to numerous conditions, which increases the risk factor many times manifold.
Businesses as Legal Activities
Though most of the profits reaped by a business are shared among its primary shareholders, all businesses should adhere to certain laws set by the central government for it to run properly. Businesses should pay taxes to the government and have a unique business identity, such that they are enrolled to receive other benefits which governments might offer them in times of crises.
The best way to compare business with profession and employment is to go back to the basics and understand the definitions of all the three.
Businesses, as discussed earlier, are economic activities which fetch organisations monetary returns against products and services which are provided by them to their customers, like a private bank which earns profit from its customers depositing money to be kept in accounts.
Professions are all those activities which are carried on by people who hold special professional skills. For example, all the accountants and staff who help a bank to run its services smoothly are professionals.
Employment refers to any activity which fetches the workers or employees’ wages or salaries, like the monthly remunerations which the bank workers receive in return of their service.
Here are a Few MCQs Which Will Help You Revise All the Concepts.
1. Almost all businesses work for an _________ cause.
d. None of the above.
2. You are selling an old mobile phone to a friend. Is this a business?
d. None of the above.
For a detailed look at the world of economics and business, go through our study material, that includes a wide range of reference notes, question papers and solved papers. For more on business, check out our free live classes, on the Vedantu app today.
1. What is the Meaning of Features of a Business?
Ans. All businesses have certain salient features which make them different from a profession and employment, such as businesses should keep maximum profitability in mind while also being legal bodies enrolled in government databases. Businesses who earn higher returns also tend to partake in higher risks and also consistently make profits for survival.
2. What is the Definition of a Business?
Ans. Any organisation participating in the selling and exchange of products and services, while also keeping in mind customer feedback, is termed as a business. Businesses always aim for higher profits, such that they have enough revenue at the end of a fiscal year and can attract more customers and investors.
3. What is the Relation between Risk and Return Undertaken by a Business?
Ans. Ideally, high-risk ventures should accumulate higher returns, as businesses often act as the pathfinder in such industries. Contrarily, low-risk ventures incur moderate returns, as an organisation has to compete with several other companies to gain a foothold.