An economic activity involving the production and sale of goods and services undertaken with a motive of earning profit by satisfying human needs in society is called business.
Characteristics of Business:
Economic activity: All business activities are economic activities and are done for the sole purpose of earning money.
Production and procurement of goods and services: A business activity involves production or procurement of goods and services. A manufacturer is involved in production, while a shopkeeper is involved in procurement.
Sale and exchange of goods and services for the satisfaction of human needs: Sale and exchange of goods and services is done to satisfy human needs.
Dealing in goods and services on a regular basis: One time dealing in goods or services cannot be termed as a business. The business should happen on a regular basis.
Profit earning: Profit earning is the fundamental motive of doing a business. Other motives are there but they depend on profit motive.
Uncertainty of returns: Returns can never be certain in business activity. This happens because of external factors which are outside the control of the business organization.
Element of risk: An element of risk is always present in business activity.
