The below-mentioned article provides a full explanation of the Meaning and Features of Business...
Table of Contents
Meaning of Business:-
The word ‘Business’ literally means ‘a state of being busy’. Every person is engaged in some kind of occupation: a worker works in a factory, a teacher teaches in the class, a farmer does his work in the field, and a salesman is busy in making the sales of the goods.
All human activities relating to the production of goods or services for satisfying human wants are called ‘Business’. Human activities may be of two kinds:
(i) Economic activities-
Economic activities are those activities which are related to the production of wealth. Every person is engaged in some kind of work to earn his living.
(ii) Non-Economic activities-
Non-Economic activities are those activities which are in the form of social service etc. These activities are not undertaken with economic objectives.
Features of Business:-
The following are the essential features of business-
- Element of Enterprise
- An element of Exchange of Goods and Services
- Profit Motive
- An element of Risk and Uncertainty
- Economic Activities
- An element of Creation of Utilities
- An element of Continuity of Transaction
The element of Enterprise:-
This is the first or primary feature of business and it means the element of enterprise exists in every business. The person who recognizes the need for a product or service is known as an ‘entrepreneur’.
The entrepreneur is an important factor in the process of economic growth. It is the entrepreneur who visualizes a business, combines different factors of production and puts them into a going concern.
An element of Exchange of Goods and Services:-
This is the second or secondary feature of business and it means a business activity aims at the transfer of goods and services. The exchange of goods and services is undertaken with a ‘profit motive’.
Any activity is done to satisfy oneself cannot be known as business. For Example– a tailor who stitches his own pant is not paid for this. On the other hand, if he stitches pants for others in exchange for money, it can be included in the business activity.
- Profit Motive-
This is the third or territory feature of business and it means the motive of profit is an essential characteristic of business. Any human activity is undertaken without a profit motive cannot be included in the business.
The incentive of earning profits keeps a person in business and is also necessary for the regulatory and continuity of the business. This motive has, therefore, played a very important role in the establishment, running, and expansion of the business.
An element of Risk and Uncertainty:-
This is the fourth feature of business and it means the element of risk and uncertainty exists in every business. The factors on which business depends are quite uncertain. The success of a businessman depends upon his correct forecastings, otherwise, he may be forced out of the business, keeps the businessman vigilant.
This is the fifth feature of business and it means only economic activities are covered in the business. Economic activities are those activities which are related to the production and distribution of goods and services.
These activities are undertaken with an economic motive. Any activity is undertaken without economic motive will not be included in the business.
An element of Creation of Utilities-
This is the sixth feature of business and it means is an important element if business. Business makes goods more useful to satisfy human wants. Business creates various types of utilities in goods so that consumers may make use of them.
The utilities may be – time utility, form utility, and place utility.
An element of Continuity of Transaction-
This is the seventh feature of business and it means continuity is an important element of the business. In business, the transaction of goods is a must but it must be regular and continuous. Only regular and continuous transactions are included in the business.
A single transaction cannot be called business.