Job Council News

The Definition of Business


The term business is a general umbrella term for an activity that provides a product or service to consumers. Examples of tangible goods are cars, soda, and televisions. Services can be anything from haircuts to hotel stays and roller coasters. Depending on the industry, businesses can be categorized in one of two ways: for-profit and non-profit. Regardless of the type of business, the profit motive must be present. For-profit businesses require a profit motive.

Businesses may be small businesses or large, international companies that span various industries. Examples of large businesses include Apple and Walmart. There are two basic definitions of business: a commercial activity or a non-profit entity. In both cases, the main purpose is profit generation. Businesses typically start with a concept or a name, and then research the market to determine the feasibility and potential of the business. In some cases, extensive market research is required to validate the concept before launching the business.

The purpose of business is to create a profit through service or the production of goods. Although there are many types of businesses, the profit motive is the primary motivation for businesspeople. Without profit motive, business would cease to be a profitable endeavor. Aside from the profit motive, business enterprises must also embrace the service motive. While manufacturing and selling goods are the fundamental characteristics of business, service enterprises produce intangible goods. Moreover, businesses should consider service motive to remain profitable and a sustainable endeavor.

The idea that financiers are the owners of a company dates back to the early days of business. When the financier of a business actually owned the company, he was the sole executive and genuinely the owner. Interestingly, this idea of a company being a property is related to corporate law, which was only applicable to companies with physical assets two centuries ago. However, this doctrine does not have the same effect on a business today. In the beginning, corporations were only able to generate profits and were not capable of distributing them to their owners.

The goal of modern business is profit through service. Profit through service is the preferred definition of profit in this day and age. Profit is the goal, not the product or the service. The main purpose of modern business is to generate a flow of goods and services, which is ultimately responsible for economic growth and appreciation of gross national income. Therefore, a business plan must clearly define these goals and outline the strategy that will achieve them. It should also include the legal structure of the company.

Profit is the prime objective of any business. Without profit, the business will not survive. Profits are required for day-to-day expenses, and a business can only survive if it is profitable. Profit also increases the goodwill of the business, whereas profits increase the value of the company. Businesses that earn profits are often able to attract and retain talented workers. They can easily obtain credit as well. These are the main reasons for profit-making businesses.