What is business?

We explain what is business and some characteristics of this term. In addition, how can it be classified according to its activities.

  1. What is business?

The term business owes its etymology to the Latin negotium , that is, a denial of leisure : the occupation that people make for profit . This etymological character is quite particular because it defines the word in a different way to the greater use we give it today.

We do not understand by business the work activity of any person , but particularly those who are engaged in the trade of goods and services . However, it is a meaning recognized by the SAR that understands the term as a way of calling any occupation that people perform .

The circuit of the production of goods has different phases. From the mere obtaining of the raw materials, its more precarious transformation, its trips and the additions of added value are perfecting the object until arriving at the one that is believed, it will respond to the needs of the consumers . This process is justified from the business, a method to obtain money from users in exchange for the provision of a service or the delivery of some good.

Businessmen are entrepreneurs or business managers , who strive to maintain some balanced variables in the best possible way: they will seek to have high prices but accepted by buyers, they will seek to have a good quality that does not demand a quantity of money that forces prices to increase, and will seek to reduce expenses as much as possible , in order to increase the profit margin .

Where people have a need or desire, there will be someone interested in satisfying it by earning a profit for it. Some businesses will have overwhelming successes , while others may suffer resounding failures.

To analyze the performance of a business, it must be analyzed what the expenses were, and compare them with the income obtained. The Disney company began its activity with 230 dollars in 1923, and today invoices around 16,000 million dollars every year. Russia sold the territory of Alaska to the United States for just 7.2 million, later discovering that it was a territory with a large amount of metals among which gold is found, and also with a lot of oil.

  1. Types of business

A production business transforms the raw material until it meets a need.

In addition, the business concept can be classified according to the activity from which the profit is obtained:

  • Extraction business. those who take advantage of natural resources , having simply bought a portion of territory, or having invested money in elements that enhance nature (seeds for planting, grazing of animals). The existence of an extraction business is the guarantee of subsequent production businesses.
  • The product businesses. they are the ones that, as they said, incorporate added value to a raw material and transform it until it is able to meet the needs to which people allocate part of their income. Without these businesses, only things found in nature could be marketed.
  • The service businesses. they are those who lend some intangible good to people, based on the possession of some good or on some skill . In these cases the business does not come from a production chain, it simply has something whose effects people (who do not own) demand.
  • Wholesale business They are the ones that obtain a large number of products already made, and without transforming or adding anything of value, they have a storage capacity that allows them to be distributed by retail businesses. They act as intermediaries.
  • The retail business. They are the ones who buy the goods in bulk, to sell them directly to people. In some Latin American countries, this type of activity is directly known with the term ‘business’, since they are the reason why all of the above are founded. The production chain is cut abruptly when consumed by a person, which supports all the value incorporated and feeds the circuit.

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