Characteristics of Business
The essential characteristics of
business are as follows:
Goods must be produced or procured in
order to satisfy human wants.
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.
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.
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.
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
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.