The nature of Business

THE NATURE OF BUSINESS
BUSINESS
MEANING AND DEFINITION
Literally, the word business means busyness or the-state of being busy. Accordingly, a person may be busy in reading, writing, painting and playing because any of these activities may bring him money,'prestige, power or any other kinds of satisfaction. But in economic sense, the-word 'business' means efforts and acts of people which are connected with the production of wealth.
Functionally, the word 'business" refers to all those activities, which are connected with the production or purchase of goods and services with the object of selling them at a profit. Some more definitions of business are given below.
James Stephenson: "Every human activity which' is engaged in for the sake of .earning profits may be called business. According to this definition, business will include not only buying arid selling, agriculture, industry and professions but also serving an employer for salary. But we know that serving an employer is not business.
L. H. Haney: Business means "human activity directed towards producing or acquiring, wealth. through buying and selling goods". In other words, 'business may be defined as an activity in which different persons exchange something forvvalue; whether goods or services for mutual gain or profit," But in reality business is not mere exchange of goods or services. It-is something more than that.
Clark and Gottfried: The term business means, "any and all of those activities connected with the production and exchange of goods or services and
The Nature pf Business
the financial affairs connected with these activities". It is clear from this definition that business comprises of all those activities, which are concerned with both, production and distribution of goods and services.
On the basis of analysis of above definitions it may be said that 'business means those human activities which are organized and operated freely and regularly to provide goods and services.to society for the sake of private profits.1 Thus, production and exchange of goods and services for the needs of consumers can be called business. If goods or -services are produced for own use then production will not be called business because One more essential of the business is continuity in dealings. One single transaction cannot be called business. If someone earns profit by selling his personal car, his activity will not be called business. CHARACTERISTICS
1.
The essential characteristics or features of business are as follows: Production or Purchase of Goods
A businessman deals in the production or purchase of goods. The aim of business' is to provide goods to people for price. It is, therefore, necessary that there are goods to be supplied. The goods must be manufactured or purchased or procured so that they can be sold and supplied.
2. Sale or Transfer for Value
Business involves the salt, or transfer of goods and services for value. Production or purchase of goods and services for personal consumption do not involve sale or transfer and so they do not come under business. On the other hand, production or purchase of goods** and services with the object of exchanging them for value come under business. Thus, a weaver preparing cloth for his personal use is not engaged in business, but if he prepares it for the purpose of transflfrring it for value, it becomes business.
3. Dealing in Goods and Services
Business consists of transactions relating to goods and services. The term 'goods' includes both consumer's goods like cloth, shoes, soaps,'tooth paste and producer's goods like.tools and machinery. The services refer to intangible items like transportation of goods and passengers and supply of electricity: The activities of banks, financial, institutions, insurance companies, advertising agencies and transportation companies are part of business.
The Nature of Business
4. Regularity of Dealings
Regularity and recurring nature of buying and selling is a characteristic ol business. A single transaction involving buying and selling does not become business. For example, if a person sells his. car and makes a profit, his act is not a business. But if he regularly purchases and sells cars, then such an act is treated as business.
5. Profit Motive
A business is started for the sake of profit. Making profit is .an essential characteristic of business. The people do their business for earning living. The ljfe of business is Unked with.the profit. Profit .is also essential for survival and development. The hope of making profit attracts men to business. In, fact, profit is a reward for the individual ability of the businessman and also, for the service that he renders to the community.
6. Risk
A business is not free from. risk' of- loss. The future, is uncertain. Businessman's profit depends on many factors on which he may not have control and hence business involves an element of risk and uncertainty. The loss may arise any time due to change in customers taste, 'technology, government policies, weather conditions and so on. DIVISION OF BUSINESS
The term business includes industry, commerce and trade. A brief explanation of each is as under.