A business is simply defined as any entity or organized set of persons acting for the benefit of the public. In a more broad sense, business could be considered any trade or industry involving commerce and production of goods for sale. Business activities may include sales of products to be used by one person or to be sold by another. While some businesses engage in sole trading of goods, others may work in cooperatives or associations. But the ultimate aim of a business entity is to earn profit through production, sales, and services.
A profit is the difference between total cost of production or income and the amount of money realized from sales. Business enterprises strive to earn a profit so that their capital investments are returned at the end of every month. Every business has a target rate of return on investment, which indicates the amount of profit that the firm will realize over a given time period. However, profit and loss are two sides of the same coin, the former being the positive side of the equation and the latter, the negative side.
A business firm’s success is dependent upon its ability to sell its products in a competitive manner to meet the demands of the buyers. The sale of goods to customers is not only a process of going out into the market and exposing the goods to the customers but also involves creating an excellent customer experience so that the customer remains satisfied with the purchase and decides to buy again. This process of developing excellent customer service is called marketing. It is through marketing that a business firm earns a profit. Marketing is a process by which a firm tries to create a favorable impression of its goods and services to the potential customers by using advertising media such as print, television, radio, and the Internet.
A key aspect of any successful business venture is the profit motive. In order to earn a profit, a business firm must be able to convince, through advertising, its customers that it has the most efficient, highest quality, and most reasonably priced goods or services. Profit is a primary motivator of activity. The higher the price of an article, the more profit that can be earned by a business firm. A firm may attempt to increase its profit by reducing the volume of raw material used in the production of its goods and services.
Every successful business organization seeks to achieve certain specific objectives. The various objectives may include increasing sales and profits, reducing costs, increasing employee productivity, achieving a particular level of economic growth, and the attainment of other desirable goals. The various objects of business activities are grouped into three categories. One category is external objects of business activities, such as fixed assets, supplies, machinery, and inventory. Another category consists of internal objects of business activities, including staff, inventories, and working capital.
Business enterprises can succeed in their efforts to achieve their objectives if they adopt a comprehensive strategic planning approach. This planning approach draws on information from all the aspects of the businesses’ operations, including customer service, marketing, sales, and finance. Many business managers subscribe to the theory of the single owner corporation. Under this theory, businesses operate as a sole proprietorship, with only one shareholder, usually the founder. Small business enterprises, as most people believe, are truly sole proprietor organizations, having no significant number of officers and staff.