What are the characteristics of Business?

Characteristics of Business

The term business means selling and buying things. Business is a narrow concept in comparing to commerce. Business is called as backbone or base of commerce. The development of commerce is not possible without business. The business originated from barter. It involves certain responsibilities. The main characteristics of business can be summarised as under:

1. Human Activities for the Creation of Utilities

The first main characteristic of business is the creation of utility. All activities which are done to create utility for the benefit of humans are known as business. According to L.H. Haney human activities providing or acquiring wealth through buying and selling goods may be known as business. It may be a production of goods and services.

2. Business includes Goods and Services

Business includes goods and services. Such goods may be related to production work or consumers. Production goods are used to produce or manufacture certain things and consumer goods are to satisfy the requirements of human beings. The purpose of production goods is making or manufacturing certain goods for the satisfaction of human needs.

3. Regularity and Continuity in Dealing

Transactions in goods and services should be continuous. If any person does a casual function and he earns some utility, it cannot be called a business. If a farmer sells his field to purchase another new better field, it will not be a business because it is an isolated transaction.

4. Sale, Transfer, and Exchange of Goods and Services

Sale is the main ingredient of business. Sale, transfer, or exchange may be of goods or services. The purchase of goods and services is the main characteristic of the business.

5. To Earn Profit

The purpose of business is to earn profit. Every businessman does business activity to earn profit. A motive to earn a profit is a very important factor of business. Profit is necessary for the survival and expansion of business. Profit should be earned through fair means only. There should be no exploitation of society.

6. Risk Factor

Every type of business implies risk. The reason of risk is uncertainty of business in the future. Risk factor influences business.

7. Activities related with Finance

It is essential that business activity should be related with economic function. Non- economic activities cannot be considered as business. Any activity in which profit motive is not included, cannot be considered as business.