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Features of business
The important characteristics/features of a business are explained as under:
1. Production and/or distribution of goods and services: All business activities
are, directly or indirectly, concerned with the production and/or distribution of
goods and services. Production and/or purchase and sale of goods and services
for personal consumption free of charge is obviously outside the scope of
business. For instance, if a person cooks at home for personal consumption, it
is not business because it does not involve any exchange of goods and services.
But when a person cooks for others, it is his business.
2. Regular dealings: Any business activity presupposes continuity in dealings.
The exchange of goods and services should be undertaken regularly. One stray
transaction does not constitute business. For instance, if a person sells his radio
set and earns some profit, it does not constitute business. But if he keeps a stock
of such radio sets and purchases and sells regularly, he will be said to be doing
business.
3. Profit: The chief objective of a business is to earn reasonable profit as the survival
of business depends upon its ability to earn profit. Every businessman wants
to earn profits to receive interest on his capital and to reward himself for his
services.
4. Uncertainty and risk: Any business activity involves some degree of uncertainty
and risk. Profit, for which business activity is undertaken, depends not merely
on the efforts of the entrepreneur and his team but also on a number of other
factors not wholly under his control. Thus, it follows that all businesses involve
some element of risk and uncertainty in respect of success of the business.
5. Creation of utility: Raw materials are converted into finished goods, thus
creating form utility. These goods are transported to places where they are
demanded, creating place utility. They are not consumed immediately but
stored for an occasion when they are required. It then creates time utility. Thus
the business creates many kinds of utilities.
6. Satisfying the consumer: The business caters to the need of the consumers.
The goods produced should confirm to the requirements and the tastes of the
consumers and they should be made available where and when the consumers
require. Without satisfaction of the consumers, business cannot exist.
7. Satisfying the social needs: The business has also an obligation towards
the society at large. The modern concept is that business is a socio-economic
institution. Business should cater to the social requirements and avoid social
harms like causing pollution or doing something detrimental to the interest of
the society. Business and public support should go together and it is the social
responsibility of the business.
8. Finance: Business cannot exist without proper financial arrangements. Finance
may be required for a long term as well as for a short term. Finance is required
for providing fixed and working capital. A proper capital structure is a sign for
the success of the business.

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