What is Business? Goals, Characteristics, Types and more
What is Business? – Business is the activity of organizations, companies, entities, or individuals to seek profit by providing goods and services in exchange for payment. Learn more about what business functions and goals are, how they work, types, characteristics, and full examples here!
What is Business?
Business is a term that refers to organizations (consisting of a group of people or individuals) and entities with a common goal of seeking profit.
Business people and their groups engage in commercial, professional, or industrial activities, for profit. This is done by providing goods or services according to the needs of the market or consumers.
The term business also means an effort and activity of individuals and groups in producing goods/services to be offered/sold and exchanged for payment. If an entity provides goods/services but does not seek profit, it is not included in the definition of business.
According to F. C. Hooper, the definition of business is all sectors of commerce including complex industry, basic industry, manufacturing, and processing industry, ancillary service networks, distribution, banking, insurance, transportation, and so on. Have activities that include the service of business work as a whole.
Starting from street vendors, sellers in the market, shops in malls, repairmen, and so on—all of them do business because the goal is to make a profit.
Business Concepts and How it Works
Understanding the meaning, activities, and functions of a business will help you to run your business smoothly and integrate. Here are some key points about the business:
- Complying with applicable laws and regulations in business activities will prevent you from fines, penalties, or business paralysis.
- Business actors are required to obtain a business license, license, requirements, place of business permit, business certificate, and other obligations.
- You need to make a mature business plan before operating a business. This includes business ideas, capital, organizational management, target customers, location, sales strategy, market research, and business targets.
Reporting from Investopedia, a business can be interpreted into two different concepts. That is:
- Business refers to an entity that operates for commercial, industrial, or professional reasons. This includes entrepreneurs, business owners, contractors, as well as entrepreneurs.
- Business refers to all activities related to the sale and purchase of goods and services. Selling/buying activities in the market, selling online, freelancers, buying/selling with partners, and so on.
Any activity that is carried out to earn a profit or expect a profit is classified as a business activity.
What are the Business Goals?
Understand more about the following business goals:
1. Looking for Profit
Everyone will eventually carry out their business activities. In essence, the business functions to generate income and profits when done with the right strategy.
2. Meeting Consumer Needs
The goal of every business is to meet the needs of consumers and provide good service. Either by offering goods, products, services, or services whose quality and details are to consumer expectations.
3. Influence on Economic Growth
Not only does it affect the owner or the internal team of a business, but every business actor, even in the MSME sector, also affects the economic condition of a country.
Income or profits from business actors have taxes that are channeled for state development.
4. Open Jobs
Every form of business needs the right team or human resources. This process will always create job opportunities, improve the economic sector, and make the community prosperous.
5. Improving Living Standards
By making a profit, every business person and his group will have the ability to fulfill their daily needs to raise the standard for the better.
6. Creating Innovation and Delivering Value
Not only about money, but business processes also force business actors to create innovations that are useful for consumers. Offering high-quality and value products. That way they can run a long-term business.
7. Answering the Challenge
Every businessman has different challenges to survive. There is business competition, new strategies, government regulations, capital problems, and so on.
The business offers challenges, happiness, and satisfaction if successful in running it.
8. Adapting on a Risky Road
Everyone may be able to start a business, but only those who have an entrepreneurial mentality can survive and thrive in various business risks and uncertainties.
9. Market Expansion
Furthermore, various strong business strategies will support business people for market expansion. In the end, getting a wider advantage but of course, the struggle is also not easy.
An activity can be categorized as a business if it has the following characteristics:
1. Main Motive of Profit
The main goal of business is to find and make a profit. A more profit motive can motivate business actors to continue to grow.
This must be balanced with the service motive and the motive to meet the needs of consumers with the best quality.
2. Productive Activities
Creating, producing, and selling products or services. The classification is as follows:
- Consumer Goods. Food, drink, clothing, furniture, books, etc.
- Producer Goods. Raw materials, supporting materials, machinery, production equipment, etc.
- Services or Services. Items are intangible but there are results. For example, chef, driver, etc.
3. Economic Activities
Business is an economic activity which means that there are production/service activities and earn income and profits.
Non-economic activities are not business, for example, charity, volunteering, or farming/gardening for own consumption.
4. Continuity Activities
Buying and selling activities must always be sustainable and consistent. Only doing one transaction activity is not classified as a business.
For example, if you sell your preloved item once, it’s not a business.
5. Having Risk and Uncertainty
It is said to be a business activity when you experience risks, uncertainties, and trading cycles.
General Business Scale
There are several sizes of businesses seen from the scale. Here’s a full explanation:
1. Small Business
Companies, business entities, or traders/individuals on a small scale usually carry out business activities with only one person or several people (small group).
For example, street vendors, kiosks, home businesses, clothing businesses, market vendors, etc. Profits from small businesses are low but still sufficient to run a business.
2. Medium Enterprise
Medium-sized businesses are run by employees ranging from 100 to 999 people. Have sufficient income and profits and continue to grow.
3. Big Business
A business that carries on its business activities with more than 1,000 people. It may also have been a wider market expansion.
Types of Business Based on Business Activities
There are various types of businesses operating, but in general, they cover the following categories of business activities:
Activities of selling certain merchandise or services/services to consumers. Sold in small quantities for use or consumption, tend not to be resold.
Also called (merchandising). For example, grocery stores, clothing stores, electronics stores, and others.
Selling services or services according to consumer needs. The target is to generate customer satisfaction and get paid.
For example, the work done by barbers, doctors, teachers, lawyers, mechanics, bank clerks, insurance companies, and so on.
Business activities in which the manufacture or manufacture of goods from raw materials to be processed into finished goods or semi-finished goods. Then, they are sent to wholesalers for resale.
For Example, industrial factories, clothing, and textile factories, oil companies, food and beverage companies, tea, sugar, coffee factories, and so on.
4. Hybrid Business
The merger of the types of businesses that have been mentioned above. For example:
- A restaurant makes its food and beverage products (manufacturing).
- The restaurant also sells products produced by other companies or factories ( merchandising ).
- The restaurant also of course provides services to customers that are carried out by the team (service).
Economic activities in the category of supplying, manufacturing, trading, and shipping products, or other productive business activities.
Types of Business Based on Structure
The following are the types of businesses based on ownership structure:
1. Sole Proprietorships
A business owned and controlled by one person. Both functionally and legally, that person bears all the responsibilities.
He takes care of the expenses, income, profits, as well as taxes and legal obligations for the business, which are also borne by the owner.
This means that business relationships and various provisions are managed by two or more people. They join forces to run a business together.
Each of these business partners contributes funds and other resources. Business profits and losses are also shared.
A corporation is a business system in which a group of people acts for a common vision and mission as a unit. Its business activities also produce goods or services for consumers.
4. Limited Liability Companies (LLCs)
A relatively new business system. It was first introduced in Wyoming in 1977. A limited liability company combines the pass-through tax benefits of a partnership with the benefits of a limited liability company.
Those are the different types of businesses that operate in many places. These activities produce products/services and then sell them for profit.
Business Industry Overview
The business industry is a term to describe how an industry operates. For example:
- Real Estate Business. A business that is engaged in buying and selling land as well as its buildings, including housing, buildings, apartments, and so on.
- Advertising Business. Companies engaged in advertising (advertising) provide services as well as advertising production. Their productive activities include looking for ideas, concepts, marketing strategies, design and copywriting, advertising publications, and so on.
- Startup Business. Start-up (newly created) companies that are usually engaged in the media and digital technology sector. For example, the ride-hailing business, e-commerce, and so on.
- Creative Business Industry. A business whose resources come from creativity, ability, and individual talent in creating products/services. For example, films, albums, animation, TV and radio, fashion, visual design, and so on.
- Agricultural Industry. Business related to the production of food/beverage crops, as well as aquaculture, livestock, fisheries, and forestry sub-sectors.
- Transportation Industry. Provide transportation and its services, including bus, train, sea transportation, air transportation, and so on.
- Tourism industry. Introducing existing tours and continuing to develop them. Part of the entertainment industry and the hospitality industry. The activities can be in the form of services as well as products.
- Aerospace Industry. Includes research, development, and manufacture of aviation vehicles.
There are, of course, many and varied industries operating and thriving in society—as part of doing business and things in between.