What Is A Business? Definition| Types| Classification of business activities.

   A business is an activity geared toward satisfying a customer’s need by producing, buying, or selling goods and services to make profits. Examples of a business; the production of automobiles, farming, drop shipping, catering, and so on.

 The word business is derived from the word “busy” which means doing things. Hence business involves doing things to satisfy human wants with the main aim of making money while doing so.

Starting up a business is one of the legit ways to make money, the wonderful thing about business is that you can start up anywhere even with low capital, that is why so many people especially teenagers and youths are passionate about starting a business as a result of the benefit it provides.

A business is owned and controlled by a businessman or woman who bears the most risk in the business and enjoys the most rewards. To generate sales and maximize profits, a good businessman or woman should possess special skills and expertise such as communication, negotiation, conversion, and so on.

Classification of business activities

Industry

An Industry is the production side of business activity, it is concerned with the conversion of raw materials into finished goods that are ready for use. This process involves, raising, producing, processing, or manufacturing goods.

The goods produced in an industry can be used by consumers immediately, it is referred to as consumer goods or they can be used by other producers to produce other goods, this type of goods is referred to as producer’s goods.

Examples of consumer goods; are cosmetics, rice, clothes, etc.

Examples of producer’s goods; are machinery, equipment, tools, etc.

There are 6 types of industry, and they play various roles in the growth of an economy. They are;

Service industry, Extractive industry, Genetic industry, Primary industry, Construction industry, and Manufacturing industry.

 

Commerce

Commerce refers to the buying and selling of goods, property, and services especially on a large scale for money. It often requires the transportation of goods from one place to another.

Commerce is not concerned with the production of these goods like an industry, it is only concerned with the distribution of goods from manufacturers to consumers.

Types of Business

 

Service

An activity performed to earn money by helping someone to perform a particular task is known as service. It involves professional skills and expertise.
E.g. A mechanic performing routine maintenance  repair work on a vehicle

Merchandising

Merchandising means the distribution of goods from manufacturers or wholesalers at a low price and reselling them at a higher price to the final customers to make a profit For example; grocery stores, clothing stores, drug stores, etc.

Manufacturing

This is a type of business that uses components, parts, or raw materials to produce goods that are ready for use. These goods can b sold to customers directly or they can be sold to other producers to manufacture other goods. Examples; petrol, cosmetics, shoe, baked goods, etc.

Hybrid

This is a business that is classified into more than one business, it combines all three types of business, that is manufacturing of goods, merchandising of products, and delivering service falls under the hybrid category.
E.g. A wig maker, who produces wigs, buys old wigs and sells them at a higher price after revamping and also provides services for revamping old wigs.

Business sizes

 

Sole proprietorship

This is a type of business that is owned and operated by one person. He or she bears all the risks in a business and is responsible for managing and generating more capital for the business. He or she is responsible for the payment of taxes and other liabilities.

Partnership

This is a type of business that is owned and operated by two people.  Each partner contributes money and resources to pay for business expenses and contributes to the growth of the business. Each partner bears the loss and risk involved in the business and enjoys the profits incurred by the business.

Corporation

This type of business is a legal entity created by individuals, stockholders, or shareholders, to operate for profit. This form of business is owned by shareholder(s) who elect a board of directors to oversee the organization’s activities. Corporations are allowed to enter into contracts, sue and be sued, own assets, remit federal and state taxes, and borrow money from financial institutions.

 

Importance of business

Businesses offer numerous advantages to various individuals and the economy of a country as a whole. Here are some of the importance of a business

1.     A business offers employment opportunities to the unemployed

2.     It helps in the growth of a country’s economy

3.     It helps to improve the standard of living of various individuals

4.     It helps to satisfy human wants

5.     It helps generate more government revenue through taxes, excise duties, and so on.

 

Examples of successful businesses and the owners

 

Dangote Group

This is a multinational industrial conglomerate founded by Aliko Dangote

It is one of the largest conglomerates in Africa and the largest in west Africa. This group generated a sum of $ 4.1 billion US dollars in 2017.

They produce and distribute Dangote cement, sugar, salt, spaghetti, and so on.

 

Apple

This company produces innovative products like personal computers, smartphones, watches, and other devices.

It was founded by Steve Jobs and Steve Wozniak. This company generated $365.8 billion in 2021.

Apple’s ability to create, develop and market new products and services enables it to be above its competitors. 

 

Facebook

This is an American multinational technology conglomerate based in California in the United States.

This company also owns WhatsApp, Instagram, and other products and services

It was founded by Mark Zuckerberg in 2004 with his fellow Harvard College students and roommates.

This company generated 85.96 billion US dollars in 2020.

Conclusion

Businesses are like the backbone of an economy because it improves the growth of an economy by firstly satisfying human wants or needs and also improving the quality of life of people to make profits from it.

A business must be able to satisfy a customer’s need for it to be successful, this means you must produce or sell something that will help to solve human problems, make life easier for humans, and satisfy their basic amenities and other wants.

 

Frequently asked questions

How do I start a business?

You can start a business by first deciding the niche you want to be part of, either fashion, clothing, food, health and fitness, transportation and so many more.

It is advisable to start up a business you’re interested in and also ensure that you possess good knowledge of the business. Check out your competitors in that niche and pick out important tips that you can apply in your business including their marketing strategy.

Write out a business plan. Decide if you want to manufacture those goods or if you want to buy from manufacturers.

Choose a good marketing medium to advertise to your target audience.

 

What business should I choose?

Actually, the best business for you to start is the one you’re skilled in and passionate about. For example, if you love fashion and you have good conversion skills, you can consider selling fashion items like clothes, bags, shoes, wristwatches, and so on.

 It is advisable to do thorough market research about the business you intend to start and ask questions from experienced people to see if it’s what you’re capable of doing before venturing into it.

 

What is a business plan?

A business plan defines your business, your business goals, your marketing strategy, and so on. A business plan provides specific and organized information about your business, including how you will repay borrowed money, properly allocate resources, handle unforeseen circumstances, and make good financial decisions and other crucial parts of a business.

Do I really need to define my business in detail?

Yes, you need to define your business in detail, though it may look unnecessary it really helps to give you a sense of direction.

So many business owners have gone broke for failing to come up with a good business plan that defines their business which is why they spend so much on the business and generate little or no profit in the end.

 

What do I need to succeed in a business?

You need to have a business plan. Always analyze your competitors and learn from both their success and their mistakes. Be unique and creative.

Ensure you have an online presence to serve your online customers because most of your potential customers are online, so you have to revolve around technology and give value to your online audience.

Be organized and provide great customer service.

 

How much money do I need to start a business?

The amount of money you need depends on the business you want to start.

You need to do thorough research on what you may need in the business, for example, the equipment, and transportation cost.

 It is advisable to seek advice from people who have experience in the same business. It also depends on how you intend to get your goods, if you want to manufacture them, it will quite expensive because of the production process. So, ensure you have enough resources to pay for your expenses.

On the other hand, if you want to purchase these goods directly from the manufacturers, it will be less expensive, easier, and faster for you to start making a profit without much stress, time, and investment.

So, the amount of money you need to start a business depends on the cost of the business product and how you intend to start either as a small business or a large business.

Can I operate a business from my home?

Yes, you can, but that’s only if you have an online or social media presence. If you do, you will be able to sell products online from the comfort of your home. Check out my post on how to make sales online.

ABOUT THE AUTHOR                 

Chisom Judith is an entrepreneur, a digital marketer, a writer, and a personal growth enthusiast. She loves to help entrepreneurs to build their brands.