What is Business?
Definition of Business. A business is an organized group of people who endeavor together to reach common goals and objectives. A company, in simple terms, is a commercially-oriented, corporate, or service oriented organization, and consists of all the individuals who make it up. Business is basically a legally-binding organization that provides services, products, or both to its customers. It enables people to operate businesses, and earn income from their businesses.
The term “business” can mean different things, depending on your perspective. For some, it encompasses any venture in which people work to earn money and use the money to support their lifestyle. Others look at it as the process by which goods or services are acquired and used by individuals or groups for mutual benefit. Still others use business to define an entire field of endeavor, such as the distribution industry. But business is so broad that there are countless fields of endeavor under this broad umbrella, each with their own unique goals, techniques, and processes. Let’s take a closer look at the four main aspects of a business:
The planning stage of what is business is essential, as it serves as the foundation and root of a successful enterprise. This stage is equally important for large corporations, medium-sized businesses, and the individual entrepreneur. The planning stage involves defining the objects and goals of the business, creating a working budget, determining the sources of the company’s revenue, determining the methods of how business activities will be conducted, and establishing a system of rewards and punishments for employees and employers. It is in this stage of what is business that plans are made to determine the scope, size, resources, and direction of a business. All of these decisions will have implications for the functioning of the enterprise.
A business strategy is the overall plan of action for conducting the company’s activities. The strategy must take into account what is business, what the company is trying to accomplish, what the competing companies are doing, and what kind of people the company wants to employ to accomplish its objective. The business strategy can be formalized in terms of a written document, but it can also be more flexible in nature as a description of what is happening “in the background.” The purpose of developing a business strategy is to organize and direct the company’s resources to meet its given objectives.
The object of doing business is to produce goods that will sell for money. The production process transforms raw materials into finished goods. In a sole proprietor business, production occurs when all of the owners cooperate in order to produce and market the goods. Under the master plan, however, production occurs only to maintain the existence and value of the business. In other words, in a sole proprietor business, what is business is selling the goods for money.
Every business operates in a specific environment to earn profits. In order to do so, goods must be produced at an acceptable rate. Profit comes when money is made from selling those goods. Production, then, is the means used to earn profits. It also involves the process of creating new goods or services, and the methods by which these products and services are produced or marketed.
A sole proprietorship is not the same as a partnership. In a sole proprietorship, the owners are always the same (a pair). A partnership exists when a group of people are considered to be separate members of an enterprise, share in its profits, and are able to control or have control over the property, equity, and debts of the enterprise. Examples of partnerships are general partnerships, limited partnership, limited liability company (LLC), and partnership.
No matter what is business, it is necessary for there to be customers or goods or services sold. Without customers or goods or services to sell, there would be no profit. Profits are the difference between what is spent on goods or services and what is made up in the end by the sale of these goods and services. Therefore, profit is the ultimate goal of every business activity.