What is business? Describe the nature of business activities.

Business — According to L.H. Haney, "Business may be defined as a human activity directed towards producing or acquiring wealth through buying and selling of goods." Similarly, A. Keith and Gubelini define business as "a sum of all activities involved in production and distribution of goods and services for private profits."

In simple terms, business refers to all those economic activities which are concerned with the production, distribution, and exchange of goods and services for the purpose of earning profit.

Nature/Characteristics of Business Activities:

1. Sale, Transfer or Exchange — All business activities involve sale or exchange of goods and services for some consideration. If there is no sale, transfer or exchange for a price, it will not be a business activity. For example, cooking food for personal consumption is not business, but cooking and selling it to others becomes business.

2. Dealings in Goods and Services — Every business enterprise produces or buys goods and services for selling them to others. Goods may be consumer goods (bread, cloth, shoes) or producer goods (raw materials, machinery). Services are intangibles like electricity, insurance, banking, transportation and warehousing.

3. Regular Dealings — Business involves a series of dealings. A single or one-off transaction is not business. Recurring purchase and sale is the hallmark of business. For instance, selling an old scooter once is not business, but selling scooters regularly is.

4. Profit Motive — Business is not charity. The primary objective of business is to earn money and acquire wealth. A business that does not earn profits cannot survive for long. Profits are also essential for growth and expansion.

5. Creation of Utilities — A business makes goods more useful to satisfy human wants. It adds time, place, form and possession utilities to various types of goods. In the words of Roger, "A business exists to create and deliver value satisfaction to customers at a profit."

6. Element of Risk — Business always involves some risk. Risk implies the possibility of loss due to uncertainties of the future. Risk may arise due to theft, fire, flood, earthquake, fall in market demand, deterioration of goods, embezzlement, etc.

7. Business is an Economic Activity — Business is primarily an economic activity as it involves production and distribution of goods and services for satisfying human wants. Its objective is to sell goods and services for profit, and it requires the use of scarce resources like capital, labour, and raw materials.