We explain what business is and some characteristics of this term. Also, how it can be classified according to its activities.
What is business?
The term business owes its etymology to Latin negotium, that is to say, a denial of leisure: the occupation that people carry out for profit. This etymological character is quite particular because it defines the word in a different way than the greater use that we give it today.
We do not understand by business the work activity of any person, but particularly to those people who are dedicated to the trade of goods and services. However, it is a meaning recognized by the RAE that understands the term as a way of calling any occupation that people carry out.
The circuit of the production of goods has different determined phases. From the mere obtaining of the raw Materials, its most precarious transformation, its travels and the additions of added value are perfecting the object until it reaches the one it is created, it will respond to the needs of the consumers. This process is justified from the business, a method to obtain money from users in exchange for the provision of a service or the delivery of some good.
Businessmen are the businessmen or the administrators of Business, who strive to keep some variables balanced in the best possible way: they will seek to have high prices but are accepted by buyers, they will seek to have a good quality that does not demand an amount of money that forces prices to increase, and they will seek to decrease as much possible the expenses, in order to increase the margin of gain.
Wherever people have a need or desire, there will be someone interested in satisfying it by obtaining a gain thus. Some businesses will be overwhelmingly successful, while others may suffer dramatic failures.
To analyze the performance of a business, it will be necessary to analyze what the expenses were, and compare them with the income obtained. The Disney company started its activity with $ 230 in 1923, and today it has a turnover of around $ 16 billion each year. Russia sold Alaska territory to the United States for barely 7.2 million, discovering later that it was a territory with a large amount of metals, including gold, and also with much Petroleum.
Business types
The business concept, furthermore, can be classified according to the activity from which the profit is obtained:
- The extraction businesses. Those who profit from natural resources, having simply bought a portion of territory, or having invested money in elements that enhance the nature (seeds for sowing, grazing animals). The existence of an extraction business is the guarantee of subsequent production businesses.
- Product business. They are the ones that –as was said- add added value to a raw material and transform it until it is in a position to meet the needs to which people allocate part of their income. Without these businesses, only things found in nature could be marketed.
- Service businesses. They are those that lend some intangible good to people, based on the possession of some good or some ability. In these cases the business does not come from a production chain, you simply have something whose effects people (who do not have it) demand.
- Wholesale business. They are the ones who get a lot of products already prepared, and without transforming it or adding anything of value, they have a storage capacity that allows them to be distributed by retail businesses. They act as intermediaries.
- Business for sale to the public. They are the ones who buy goods in bulk, to sell them directly to people. In some countries of Latin America, This type of activity is directly known by the term 'business', since they are the reason why all the previous ones are founded. The production chain is abruptly cut off when consumed by one person, who bears all the built-in value and feeds back into the circuit.