Describe the important characteristics of business.
The following are the main characteristics of business.
(a)Asmentionedin the definition, business is considered to be an economic activity as it is run with the sole objective of earning a profit.
(b)Business involves procurement of raw materials and semi-finished goods and services, which are then processed further and thereafter sold to the final consumers at higher prices. It is because of this value addition that the prices of finished goods and services are higher.
(c)Alltypes of business activities are conducted to pursue just one single motive, profit. It is the capacity to earn profits that decides the sustainability and future growth prospects of a business.
(d)Business basically involves an exchange of goods and services. The common medium of exchange is money.
(e)The exchange of goods and services (as mentioned in the point above) is done on a regular basis. Business is a continuous process in which semi-finished goods are procured, some value is added to them and the final goods are traded in the market. It should be noted that one single deal or transaction cannot be called a business.
(f)Every business, irrespective of its size (whether it is a large or a small business) and the types of goods produced, faces business risk. Although the degree of risk may differ from business to business, there is no way in which a business can escape risk. It is because of risks that no business can accurately anticipate the returns on investments.
(g) Besides the profit motive, a business aims at satisfying consumers’ wants. A business must produce goods and services considering consumers’ needs. If goods and services are produced only to fulfill the businessperson’s own needs, then this activity cannot be considered a business as the goods and services are meant merely for self-consumption.