The question of what is a business can be answered thus, as an organization. Or economic system, where goods and services get. Exchanged for one another for money. The bedrock of everyBusiness Characteristics is an investment, and having enough customers to whom it’s output can. Be sold on a consistent basis for profit-making. A Business Characteristics can be privately owned. Not-for-profit or state-owned.
What is Business Characteristics?
The business consists of three main Business Characteristics. That are necessary for a business to be established. Let’s see these characteristics:
- First, a business must be borne out of individuals. Working together in an organized fashion.
- Secondly, a business must satisfy a societal need.
- Thirdly, a business must seek to make a profit.
As stated by Pride, Hughes, and Kapoor. Businesses must be comprised of individuals who are working together in an. Organized fashion in order to be successful. Businesses also are to be organized. Around resources needed to be successful, and the type of business that is being operated. However, some businesses may be organized in a way that. Requires constant cooperation and communication with other employees. While other businesses may not need as much contact with other employees. But rather may rely on automated workflows. Each business is unique in its own way. Thus must decide the best way to be organized, depending on their individual goals.
A business must be able to satisfy a societal need. Thus must carefully consider what need they are meeting for the society. In order to strategically plan for success.
Types of Business
Businesses can be classified into four types, but are not limited to these four categories. Let’s see them
Manufacturing businesses are those in which the producers who develop the product, sell it either directly to the customer or the middlemen to conduct sales. Businesses in this category include plastic factories, steel factories, and many others.
These are businesses that specialize in selling intangible goods to the consumers. These services cannot be stored or separated from the provider. Service-based firms offer professional services, expertise, commission-based promotions, etc. Businesses in this category include schools, entertainment, consultancy, etc.
Merchandising is a middleman business strategy, that involves the business buying products from a manufacturer, wholesaler, or other partners, and selling the same at a retail price. This is usually known as a ‘buy and sell’ business as they make profits, by selling the products at a price that is higher than their cost price. Businesses in this category include grocery stores, supermarkets, distributors, and many others.
These are businesses that have the characteristics of two or more types of businesses like manufacturing, service, and merchandising. A business can manufacture some of its products, while buying some, from other forms of business to complement its own products.
Forms of Business Ownership
There are different forms of business ownership, depending on the number of the owners, the liability of the owners, representation, as well as motives. Let’s see these forms of businesses.
Sole Proprietorship is a one-man business. It is owned and operated by a single individual, and is easy to set-up, operates, and register. All the profits generated from the business, belong to the owner and the owner also bears the risks of the business.
The biggest disadvantage of this business is perhaps the fact that the owner faces unlimited liability. What this implies, is that creditors of the business can go after the personal assets of the owner in a situation where the business is unable to pay them.
A partnership is a form of business where two or more persons join hands in running a business. They usually form a partnership, which can come in two forms, the general and limited. A general partnership is like a sole proprietorship but with more than one owner, where all the owners face unlimited liability. In limited partnerships, some or all of the partners have limited liability.
A corporation is a form of business that has a different legal identity from the people who manage it. Its ownership is usually represented in the form of shares of the stock. Here, owners enjoy limited liability, even though they are not necessarily involved in the day-to-day running of the business. The business is managed by a group (board of directors) which are elected by the shareholders.
Limited Liability Company
A limited liability company is a hybrid kind of business where the characteristics of both a corporation and partnership come into play. It takes the form of a partnership because it is not incorporated and also takes the form of a corporation because all of the partners/owners enjoy limited liability.
A cooperative is a private business organization that is owned and controlled by people for the sole aim of their mutual benefits. These people are referred to as members and are benefitted from the goods and services offered by the cooperative. In a cooperative, all members are expected to help with the day-to-day running of the business, as the main motive of the cooperative is to offer service to all members instead of a return on investment.