What is Business & Nature of Business

What is Business?

“Business is any activity concerned with production or exchange of goods or with the rendering of services to the people for profit”.

• NATURE OF BUSINESS
• The following characteristics/features of business clearly explain
  the nature of the business. 
  Economic Activity
• Economics deals with production, consumption, and distribution of wealth (i.e. material resources of satisfaction of human wants). Business deals with these activities too; therefore, business is regarded as an economic activity. The object of an economic activity is to earn income.
      Deals in Goods and Services
  businessman produces want satisfying goods and services and exchange them in the market for the price to earn the profit.
  Goods mean tangible item having potential to satisfy human wants.
  For example, books, computers, clothes, foodstuff, sports ware, home automobiles, etc.
  Services mean those activities which enhance human welfare but they do not have any tangible existence i.e they cannot be weighed or stored.
  Services include such activities as medical care, auto repair, banking, transportation,
  Education, beautician, musician, etc.
      Creates Utility
  Utility means the capability to satisfy human want.
  Businessman convert raw materials into finished goods and create form utility
  Businessman transport goods from the the place where they are produced to the place where they are needed, they create place utility they store goods from the time they produce till
  The time they are soul to ultimate consumers Hence They create time utility. by creating utility, they add to the value to an item they offer in the market and thus they earn the profit.
  Profit Motiv
•   The basic object of a business is to profit. where object of economic activity is to generate income in anyway other than profit such activity is not a business. For example, earning salary as an employee, earning interest on capital or earning rent of land is not business. Similarly, an activity that deals in goods or services and creates utility but without the object of earning profit is not a business, for example, a government hospital or a government school is not a business because its object is to provide an essential service either free or at subsidized rates. 
• Risk of Loss 
• Profit is reward of an entrepreneur. Rewards of land, labor and capital are predetermined and fixed. It is the responsibility of the entrepreneur to pay remunerations to land, labor and capital employed by him. If revenues generated by a business are not sufficient, the entrepreneur is required to make payments either from his personal assets or by borrowing. therefore, with the chance to earn a profit, and also face risk of loss.