What Is a Business?
The word business is used to describe any type of occupation where people engage in the exchange of goods or services for money. The goal of most businesses is to make a profit on the transaction. Some businesses are not-for-profit and invest all their profits into achieving stated goals or improving infrastructure. Other businesses may be public, meaning that they are listed on a stock market and anyone is free to buy shares in them.
The term business is also often used to refer to a particular vertical industry e.g. ‘the music business’. It can also be used to refer to a certain type of person e.g. ‘a slick businessman’.
Many types of businesses exist, from factories that produce physical items to companies that sell services. There are even hybrid businesses that do both. Businesses that offer services are generally known as service industries, while those that offer products are considered to be in the manufacturing or wholesale/retail sectors of the economy. Some of the most successful businesses have been those that focus on a niche market, such as selling sports equipment or making bespoke shoes.
Some of the main functions of a business are to market and sell its products, procure raw materials, finance production and distribution and manage its employees. A business is also responsible for the accounting and taxation of its profits. In order to succeed, a business must have a clear vision and strategy, as well as effective management and control systems in place.
In recent years there has been a shift in the way businesses are run, with a growing emphasis on sustainability and social responsibility. This has been driven partly by a public backlash against corporations for their perceived lack of ethical standards. However, the roots of this problem go much deeper than that. The culture of business that enraptured America for so long, and subsequently infected Britain during the Thatcher era, was founded on a doctrine that proclaimed the market as king, and believed that the bottom line should always take precedence over all other considerations.
This culture has become embedded in the very fabric of the economy, and it may be difficult to eradicate. Changing the reward system in business, so that profitability takes a back seat to corporate responsibility and the wellbeing of society, might help. But it will not cure the underlying disease of capitalism, which is a cult of selfishness. This will need to be addressed at a much higher level, by changing the mindset of the entire population. Until then, we will have to keep reminding ourselves that business is not personal, and to avoid mixing it up with our private lives. This is the only way to ensure that business will become a force for good, rather than a scourge on humanity. The ‘Business of Business’ is produced by the Guardian in association with HSBC.