Business

Business is the practice of making money by producing or buying and selling products like goods and services. It also means any activity done to earn a profit.

A business can be run by an individual or a group, and the way it is set up can change how it is taxed and who is responsible if the business owes money. Some businesses are simple and run by one person, while others, called corporations, are more complex and offer special legal protections for their owners.

Most people who are not working for the government or a charity (nonprofit sector) work in the private sector. This means they are employed by businesses, which aim to make a profit by creating value that is more than the cost of producing it. In nearly every country, the majority of people work for businesses rather than for the government.

Forms

Main article: List of business entities

Different ways to start a business depend on where you live, but some common types exist:

• A sole proprietorship is owned by one person who runs the business alone and may hire employees. The owner is responsible for all debts the business owes.
• A partnership is owned by two or more people. Each partner shares responsibility for the business's debts.
• A corporation is owned by shareholders who have less risk if the business fails. Corporations can be owned by the government or private groups and can aim to make a profit or not.
• A cooperative is a business where members share decisions, unlike shareholders in a corporation.
• A limited liability company (LLC) protects owners from many risks if the business fails.
• A franchise lets someone start a business by buying the rights from a larger company. Many businesses in the United States are franchises.
• Some businesses are formed for non-profit reasons, like clubs or charities. These might not make a profit but still need to follow rules.

Classifications

Main article: Industry classification

Businesses can be grouped into different types based on what they do. Some businesses work with nature, like agriculture, which includes raising animals, growing crops, and harvesting resources like lumber, oil, and fruits. Others, like mining, dig up natural resources such as wood, petroleum, and metals.

There are also businesses that provide services instead of products. Service businesses offer things like haircuts, cleaning, or financial help. For example, banks and insurance companies fall into this group. Other service businesses include transportation companies like airlines and shipping companies, which move goods and people from one place to another. Some services are essential for everyday life, like utilities, which provide water, electricity, and waste management.

Entertainment businesses, such as film studios and newspapers, make money by selling movies, TV shows, or news. Sports organizations also fall into this category, making profits by selling sports-related goods and services. Manufacturers create products from raw materials or parts, such as cars or medical devices. Finally, real estate businesses buy, sell, and build properties like homes. Retailers and wholesalers sell these products to customers, making their profit by charging more than they paid for the items.

Activities

Accounting

Main article: Accounting

Accounting is about measuring, processing, and sharing financial information for businesses and other organizations. It helps people like investors, creditors, managers, and regulators understand how well a business is doing. Accountants are the professionals who handle this work.

Commerce

Main article: Commerce

Commerce involves the exchange of goods and services. It includes buying and selling, along with many helpful activities like communication, marketing, logistics, finance, banking, insurance, and legal services. All businesses take part in commerce in some way.

Finance

Further information: Financial management and Managerial finance

See also: Corporate finance and Strategic financial management

Finance is the study of money and investments. It looks at how assets and liabilities change over time, especially with uncertainty and risk. In business, finance helps make sure a company can pay its bills and reach its goals safely and profitably. It also decides where to invest money, how to fund operations, and how to use extra capital.

Human resources

Main article: Human resources

Human resources (HR) is the part of a business that finds, checks, hires, and trains job applicants. HR is important because it helps companies adapt to changes and meet job demands. HR departments began in the late 20th century and aim to help employees and the company work better together. HR activities include boosting creativity, improving work methods, and training employees.

Information technology

Many businesses have an Information Technology (IT) department to support their use of technology and computers. The chief information officer leads this department. For example, Ford Motor Company in the United States has over 3,000 team members with skills in computing, analysis, and technology.

Manufacturing

Main article: Manufacturing

Manufacturing is making products for use or sale using labor, machines, tools, or processes. It can range from handmade crafts to high-tech industry, where raw materials are turned into finished goods on a large scale.

Marketing

Main article: Marketing

Marketing is about creating, sharing, delivering, and exchanging things that are valuable to customers and society. It started as simply buying or selling at a market but now includes advertising and setting prices. With technology, digital marketing has emerged, using online tools to reach people.

Research and development

Main article: Research and development

Research and development are activities related to creating new products or services. They are the first step in turning ideas into real things, but they can be hard to manage because researchers often don’t know exactly how to reach their goal at the start.

Safety

Main article: Safety

Injuries cost businesses a lot of money each year. Using good safety and health systems can lower the number of accidents, insurance costs, and claims. New safety tools, like wearable devices and online training, help companies protect their workers and save money.

Sales

Main article: Sales

Sales are about selling goods or services and counting how many are sold in a certain time. Sales are important for every business and help companies succeed.

Management

Main article: Management

For a topical guide, see Outline of business management.

The smooth running of a business, and studying how this works, is called management. The main areas of management include financial management, marketing management, human resource management, strategic management, production management, operations management, service management, inventory management, and information technology management.

Owners can run their businesses themselves or hire managers to help. Managers look after three key parts of a business: money, physical resources, and human resources.

Business organization

See also: Theory of the firm and Industry self-regulation

The main things that decide how a business is set up are:

• The size and type of the business and its structure, leadership, and who owns it, studied in the theory of the firm. Smaller businesses are often more flexible, while bigger ones may need to be set up as corporations or partnerships. If a business wants to raise money from many people or sell shares on a stock market, it usually must follow specific legal steps.
• The industry and country. Private businesses are different from government ones. Some countries require certain businesses to be organized in particular ways.
• Tax advantages. Different business setups can be better or worse for taxes.
• Rules about sharing information and following laws. Some business types must share more information than others.
• Needs for control and teamwork. Businesses use different ways to manage tasks and reduce risks.

Many businesses operate through special groups like corporations or partnerships. Most places let people create these groups by filing papers and following certain rules. The people who own these groups usually are protected from having to pay the business’s debts with their own money.

If two or more people own a business together without forming a special group, they are usually called a partnership. A single person who owns a business is called a sole proprietor. In partnerships and for sole proprietors, the owners can be personally responsible for the business’s debts.

Corporations pay taxes like individuals. In some places, this can mean taxes are paid twice: once by the corporation and again by the owners when they receive profits.

Most countries have special rules for small corporations, such as simpler taxes or fewer reports.

"Going public" through an initial public offering (IPO) means selling part of the business to the public. This needs sharing information and following strict rules. Most public businesses are corporations, but some are other types like LLC's.

Capital

When businesses need money (called capital), they might sell securities.

Businesses can get money from private investors, through an initial public offering or IPO on a stock exchange, or in other ways.

Big stock exchanges include the Shanghai Stock Exchange, Singapore Exchange, Hong Kong Stock Exchange, New York Stock Exchange and NASDAQ (the US), the London Stock Exchange (UK), the Tokyo Stock Exchange (Japan), and Bombay Stock Exchange (India). Most countries have at least one stock exchange.

Other ways to get money include crowdsourcing online, venture capital, bank loans, and debentures.

Intellectual property

Main article: Intellectual property

Businesses often have important ideas or creations called "intellectual property" that they need to protect from others. This can include patents, copyrights, trademarks, or keeping secrets safe. Many businesses protect their names, logos, and other branding. Laws about these ideas differ between places, so businesses need to protect them wherever they work. Countries that agree to international treaties about intellectual property follow these rules. To keep secrets, businesses might ask employees to sign agreements limiting what they can share.

Trade unions

Main article: Trade union

A trade union is a group of workers who join together to work for better pay, safer working conditions, and better benefits like health care. The union talks to employers for its members and helps negotiate labor contracts. Unions aim to improve jobs, including wages, safety, and rules about hiring and firing.

Business regulation and commercial law

Main article: Commercial law

Different places have rules about how businesses can operate. These rules help make sure everyone is treated fairly and that businesses follow the law. For example, there are rules about how much workers should be paid and how many hours they can work. Some jobs, like doctors or pilots, need special licenses before someone can start working in that job.

Businesses also have to follow rules to keep information safe and to make sure they are doing things the right way. Some businesses, like power companies or banks, have even more rules to follow. These rules help make sure everyone is treated fairly and that businesses are honest and open with their information.