Q1. What are Characteristics or Features of Business?
Ans. Characteristics or Features of Business are:
- An Economic Activity: Business is an economic activity as it is undertaken with objective of earning money or livelihood and not because of love, affection or any other psychological reasons.
- Production or Procurement of goods and service: Business exist to satisfy the wants of consumer. So, every business either itself produces the goods or services or procures them from other in order to sell them to consumers or users. Goods may consist of consumers goods (sugar) or capital goods ( like machinery etc). Services may include facilities in form of transportation, banking, electricity etc.
- Sale or exchange of goods and services: All business activities are directly or indirectly concerned with transfer or exchange of goods and services for value. Production or purchase of goods for personal consumption can’t be called as business activity as there is no sale or transfer for value. Example- Cooking food at home is not business however cooking food in restaurant for customers and charging from them is business.
- Dealing in goods and services on regular basis: Business involves exchange of goods and services on regular basis. A single transaction of sale or purchase does not constitute business.
- Profit earning: The main aim of every business is to earn profit. NO business can survive for long without earning profit. Business man makes all possible efforts to maximize profit by increase volume of sales or reducing cost.
- Uncertainty of Return: Every business aims to earn profit. However, there exist uncertainty of return that businessman may earn on his investment. It is not certain as to what amount of profit will be earned. There is always a possibility of losses, in-spite of best efforts put into business.
- Element of Risk: Risk is uncertainty associated with an exposure to loss. It is related with certain factors like change in customers taste and fashion, strikes including competition, fire, theft, natural calamity etc. All these can lead to loss. So in business there is always element of risk.