What does the word “Business” mean? The dictionary meaning of the word is “the bringing together of persons for the purpose of making a profit”. A business is defined by an organization or individual as having a legal status, namely an established business or entrepreneur, engaged in commercial, or even professional activities for profit. Businesses may be either for-profit or non-profit entities that conduct primarily to meet a social objective or further an ethical purpose.
A business may be planned as a sole proprietorship, partnership, corporation, limited liability company (LLC), or a partnership. Within any of these types of structure, the variations are endless as far as the profit levels are concerned. Some key terms when it comes to business include: revenues, earnings, gross sales, and the like.
The income of a firm is the value that it brings in to the community through its products or services. Every firm is actually paying taxes on its income because such taxes are imposed on the profits of the company. The profit of a business organization is the difference between total assets and total liabilities. A sole proprietorship is considered a sole proprietorship by the Internal Revenue Service and is usually described as a corporation with only one owner. In this type of structure, all revenue is only from the sale of stock and, therefore, there is no taxable income.
A business is characterized by its customer focus. What does this mean? The company focuses on providing a product or service that enhances the lives of the customers in an efficient and effective manner. In today’s economic climate, this is increasingly becoming impossible for many companies to achieve.
Business enterprises earn profits by creating marketable products and services and promoting them in the most efficient manner. The firm then engages in selling these products and services at a higher price than their costs. In order to sell its products and create market prices for them, the firm must expand its production capacity. It has to make use of modern technology – computers, for instance – to increase its productivity. To increase the number of its customers and keep them satisfied with its quality products, firms have to develop efficient marketing systems.
The profit of an organization comes from two sources: primary production and secondary production. Primary production refers to the goods and services that come straight from the head office of the manufacturer and are sent to shops and distributors. On the other hand, secondary production refers to the things that factories create, but which are sold to retailers after they have been produced. In essence, the goods that these firms create are the raw material used to make their products -or raw materials that raw materials are mixed with to create the finished goods.
In order for a business to reach its profit potential, it must be able to achieve total revenue. Total revenue means the money that a firm makes from selling its products or services, and it includes only that money that goes into the coffers of the firm. A firm’s profit margins are thus the difference between the amount of revenue it makes and the amount it pays to its suppliers. A company that obtains high profits through high margins has what is called a “good profit margin,” while a company that obtains low profits has what is called a “bad profit margin.” Thus, a firm that earning good profits maximizes its profit margins and expects to earn good profits; in this way, it increases its capital so it can use its profits for expansion.
Another important aspect of Business Strategy is the fact that the key takeaways apply equally to a corporation as well as to a sole proprietorship. A corporation has its own management system, its own finances, its own production process, and its own marketing system. A sole proprietorship, on the other hand, has none of these things -it has no management system, no budget, and very little direct interaction with external organizations or people. Thus, the key takeaways of a Business Strategy that concerns itself with the corporation include: create a strong brand identity, which allows your firm to differentiate itself from similar firms and to become known as a trustworthy and dependable firm; use a business model that provides for the development and maintenance of an organizational culture that ensures that all parties involved to treat each other with fairness and professionalism; ensure a high degree of organizational flexibility – change can and does occur in any organization, but should be handled carefully and with extreme care; and make use of financial means to enlarge a firm’s market share within the market it serves.