What is the definition of a business? A business is simply defined as a commercial entity legally defined as an organized body corporate or association, for the purpose of conducting business. A business can be either for-profit or nonprofit organizations that operate for the purpose of meeting a social purpose or furthering a social cause. In addition to that there are different types of businesses such as services, production, distribution, information technology, financial activities, and marketing which further categorize businesses.
Within these categories, there are some important distinctions for profit and non-profit businesses. For Profit businesses are those which directly earn their profits through production or sales while non-profitable businesses are those that indirectly benefit from its operations. Examples of profit sectors are retailing and wholesale trading whereas non profit sectors are government agencies and education. In addition to profit and non profit, business can further be broken down into technical, manufacturing, and service businesses.
Non-Profit businesses may provide goods or services for a price, while for-profits provide goods or services for a fee. The for-profit sector has a greater number of sub-sectors such as museums, charity, community and social organizations, and trade and service industries. There are many examples of for-profit businesses such as music, publishing, architecture, broadcasting, and lending institutions while private schools, churches, and charities are categorized as non-profitable.
Business concepts like management styles, goal setting, financial structure, business plan and development, marketing techniques, and operation procedures should all be clearly defined. The knowledge of management styles helps determine the overall success or failure of the business. The financial structure assists in controlling the costs and allocation of funds while planning the use of capital resources. The business plan and development are the backbone for the organization’s success as it provides direction for the future growth of the company. Marketing techniques help gain customers and introduce new products or services.
A well-developed business plan aids in determining the financial obligations of the company and determines the overall strength of the enterprise. It includes a balance sheet that presents the assets, liabilities, and assets covered by cash. A company can use the balance sheet to assess its current assets, current liabilities, and future assets. The cash flow is the key to determine the ability of a business to meet its financial obligations. To achieve a desired level of cash flow, a company should include the four facets of cash management such as financing, investment, expansion, and control.
The objectives of the business concept should be included in the executive summary. Objectives assist in determining the business’s growth potential. The size of the profit margin of the business should be determined based on projected sales and profit margins. The benefits of the business concept should also be included in the executive summary. This helps in determining whether the business provides a competitive advantage by serving a niche market or not.
The profit model is used to compare the profit and the loss of the entity. It presents an analysis of the losses incurred during the year and the profit realized. Some of the aspects to consider in the model are customer satisfaction, product quality, competitive positioning, and market penetration. Identifying the risks and the opportunities involved in specific aspects of business operations is necessary. The ultimate objective of the model is to provide a transparent view of the performance of the entity. It enables the business owners to make decisions based on factual information about their businesses.
The strategies involved in the business success should be included in the executive summary. They include the long-term goals, short-term goals, target market, and the strategies and measures designed to achieve these goals. Other aspects of business success include using technology effectively. Using technology in the right way ensures smooth and trouble-free operation.