Characteristics of Business

Characteristics of Business

The essential characteristics of business are as follows:

i. Production or Procurement of Goods

Goods must be produced or procured in order to satisfy human wants.

ii. Sale, Transfer or Exchange

There must be sale or exchange of goods or services. When a person weaves cloth for his personal consumption, it is not business because there is no transfer or sale.

iii. Dealing in Goods and Services

Goods produced or procured may be consumer goods like cloth, pen,  brush,  bag etc., or producer-goods like plant

Comparision of Business, Profession and Employment and machinery. Services refer to activities like supply of electricity, gas or water, transportation, banking, insurance etc.

iv. Regularity of Dealings

An  isolated  dealing  in  buying  and selling does not constitute business. The transactions must be regular. For example, if a person buys a scooter for his use and later on disposes it of at a profit, he cannot be said to have been engaged in business. The buying and selling must be recurrent to constitute business.

v. Profit Motive

An important feature of business is profit motive. Business is an economic activity by which human beings make their living. It is, in fact, the attraction of profit which spurs people to do business.

vi. Element of Risk

The profit that is expected in a business is always uncertain because it depends upon  a number of factors  beyond  the  control  of the businessman. For example, change in consumer preference, shortage of raw materials, transport bottlenecks, power- crisis etc., may upset business calculations and result in loss. That is why profit is said to be reward for risk-taking. Thus any business activity includes an element of risk too.