Following are the characteristics or features of business:
(1) An Economic Activity:
- A business is an economic activity which includes the purchase & sale of goods or rendering of services to earn money.
- It is not concerned with the achievement of social and emotional objectives.
Example: Wholesaler sell goods to the retailers and retailers sell goods to the customers.
(2) Manufacturing or Procurement of Services and Goods:
- Before offering goods to the consumer for consumption it should be manufactured or procured by businesses.
- Business enterprise converts the raw material into finished goods.
- Organisations also procure finished goods& services from the producers to meet the needs of the customers in the market.
- Goods can be a Consumer good like sugar, pen, ghee, etc. capital goods include machinery, furniture, services like transportation, banking, etc.
Example: Individual retailer buys the toffees from wholesalers in a specific quantity and sells it to the ultimate consumer.
(3) Exchange or Sale of Goods and Services for the Satisfaction of Human Needs:
- Every business activity includes an exchange or transfer of services and goods to earn value.
- Producing goods for the goal of personal consumption is not included in business activity.
- So, there should be the process of sale or exchange of goods or services exits among the seller and the buyer.
Example: A lady who bakes pastries and cakes at home and sells it to the pastry shop is a business activity.
(4) Dealings With Goods and Services on a Daily Basis:
- Every business, rendering either services or goods should deal on a daily basis.
- A one-time sale is not considered a business activity.
Example: If a person sells his old car through OLX even at a profit will not be considered as a business activity. But if he is engaged in regularly trading of cars at his showroom will be considered as business activity.
(5) Profit Earning:
- No business can last for long, without making a profit.
- The purpose to conduct the business is to earn profits and minimise the cost.
Example: A business house tries to reduce the cost of production and the cost of raw material to earn high profits.
(6) Uncertainty of Return:
- The possibility of earning profit or loss is very uncertain and can’t be anticipated by the entrepreneur.
- Hence, no business can totally do away with risks.