Characteristics of Business

Business is defined as an organised economic activity in which the exchange of goods and services takes place in exchange for a fair and reasonable compensation. It encompasses all activities whose sole purpose is to make available to the general public the goods and services that they desire in a timely and efficient manner.Businesses can be for-profit or non-profit organisations that exist to make a profit or to advance a social cause, depending on their purpose.A business name does not distinguish the entity from its owner, which means that the owner of the business is jointly and severally liable for any debts incurred by the business entity. If the company incurs debts, the creditors may be able to seize the owner’s personal belongings if the company fails. Business structures do not allow for the application of corporate tax rates. Profits earned by the business are taxed at the individual level by the proprietor.

Types of Business

There are mainly 3 types of business:

• Sole Proprietorship
• Partnership
• Corporation

Sole Proprietorship

Ownership is limited to one person i.e., you are the only person who owns and operates the business. When compared to a partnership or corporation, this type of business is straightforward and simple to start, and there may be fewer administrative requirements.

In addition, one of the most significant disadvantages of being a sole proprietor is that you are personally liable for any and all debts and obligations incurred by the company. Creditors can pursue a claim against any assets registered in your name, including your home, vehicle, and investments, and family members may be held liable as well.

Partnership

A partnership is a non-incorporated business formed by two or more people to carry on their respective businesses. It is relatively simple and inexpensive to establish this type of business, and the costs of setting it up are usually shared equally among the partners. A legal agreement should be drafted to outline how profits will be divided between the parties involved.

Similar to this, there is no legal separation between you and your organisation. However, you are also financially liable for any business decisions made by your partner, which means that if a contract is broken or debts are incurred without your knowledge, you are still on the hook financially for those decisions.

Corporation

A corporation is a legal entity that exists independently of its shareholders. Corporations provide a flexible organisational structure and the ability to divide ownership through stock ownership, but they are also more complex, so it is always a good idea to consult with an attorney before incorporating. In addition, this type of business may be more expensive to start up than other types of businesses.

The incorporation of your company can take place at either the provincial/territorial or federal level; however, corporations are heavily regulated in both jurisdictions. You’ll be required to keep extensive records and submit documentation to the government on an annual basis.

Characteristics of Business

Listed below are the top ten distinguishing characteristics of a successful business:

1. Economic Activity 

 Business is defined as the production and distribution of goods and services, which is defined as an economic activity. It provides employment opportunities in a variety of industries, including banking, insurance, transportation, manufacturing, and trade. In economic terms, it is a type of activity that is concerned with the creation of utilities for the satisfaction of human needs.

2. Purchasing and Selling 

Trading is the most fundamental activity of any business. The business involves the acquisition of raw materials, plants and machinery, stationary, and real estate, among other things. It, on the other hand, sells the finished goods to consumers, wholesalers, retailers, and other businesses. Business is responsible for making a variety of goods and services available to members of all social strata.

3. Continuous Process

Business is not a one-off or seasonal activity. Producing and distributing goods and services is an ongoing process that takes place on a continuous basis. A single trade transaction cannot be referred to as a business transaction. A business must be conducted on a regular basis in order to grow and generate consistent returns.

4. Profit as a Driving Force 

 Profit is a key indicator of a company’s success or failure. In the business world, it is defined as the difference between revenue and expenses. With the production and sale of goods and services, the primary goal of a business is typically to achieve the highest possible level of profit. In other words, it is a return on investment. In all business activities, profit serves as the primary motivating factor. Making a profit is essential for the survival, growth, and expansion of a business. It is undeniable that every business exists in order to make a profit. Profitability is the primary goal of every business, despite the fact that it has many other objectives. It is necessary in order to stimulate economic growth.

5. Risks and Uncertainties 

Risk is defined as the effect of uncertainty on an organisation’s goals and objectives. Every business is fraught with the possibility of failure. There are two types of risks that businesses are exposed to: insurable risks and non-insurable risks. The risk that can be insured is predictable

Advantages of Business

1. Quickness and Adaptability

Startups are typically smaller and less structured than established businesses. They are also forward-thinking, constantly refining their business models, processes, and product offerings. Because of this, they can respond quickly to disruptive technologies and shifts in market conditions. Established competitors must contend with vested interests, a well-established track record, and a strong team culture. As a result, they are resistant to change.

2. Efficient Use of Resources

The administrative costs of established businesses are substantial. Startups are able to provide their services in a more efficient, cost-effective, and competitive manner than established businesses. Most of the time, they are well aware of their own limitations and tend to concentrate on their core strengths. As a result, they have formed partnerships with other small organisations. Customers frequently reap the benefits of a superior value proposition.

3. The Team’s Atmosphere

Employees of large corporations are drawn to their positions by their prestige and high salaries. In the process, they can easily lose sight of the organisation’s vision, mission, and values, as well as the success of its customers. Employees at startups form a close-knit community that is united by their passion, beliefs, and values. Their efforts must be coordinated for the benefit of the company, its customers, and the greater good of the world.

Disadvantages of Business

1.Risk

The majority of startups fail within their first year of operation, putting them at a high risk of failure. Working in such a high-risk environment can cause a startup’s strategic vision to become hazy. They either miss out on market opportunities or grossly overestimate their sales projections as a result of this. A high level of risk also makes it difficult for a startup to recruit experienced and qualified employees.

2. Reimbursement of Expenses

Startups require a lot of sacrifice, as well as a lot of sweat and tears, and long working hours are standard for them. Because it takes time to generate revenue and make profits, the rewards may be modest at first. Some startups fail because it is demotivating to work without receiving a fair wage for their efforts.

3. Market Access

Many customers prefer to do business with a company that they have previously worked with rather than a new startup. Furthermore, it is more expensive to acquire new customers than it is to retain existing customers. Understanding market needs becomes a real challenge when one does not have a strong customer base. All of these factors, taken together, raise the cost of business development for new businesses.

Conclusion

Business is defined as an organised economic activity in which the exchange of goods and services takes place in exchange for a fair and reasonable compensation. Businesses can be for-profit or non-profit organisations that exist to make a profit or to advance a social cause, depending on their purpose. Business is defined as the production and distribution of goods and services, which is defined as an economic activity. Trading is the most fundamental activity of any business. Understanding market needs becomes a real challenge when one does not have a strong customer base. All of these factors, taken together, raise the cost of business development for new businesses. Some startups fail because it is demotivating to work without receiving a fair wage for their efforts.