In economics, a business is a legally recognized organizational entity existing within an economically free country designed to sell goods and/or services to consumers or other businesses, usually in an effort to generate profit.
In predominantly capitalist economies, where most businesses are privately owned, businesses are typically formed to earn profit and grow the personal wealth of their owners. The owners and operators of a business have as one of their main objectives the receipt or generation of a financial return in exchange for their work and their acceptance of risk. Notable exceptions to this rule include cooperative businesses and government institutions. This model of business functioning is contrasted with socialistic systems, which involve either government, public, or worker ownership of most sizable businesses.
The etymology of "business" relates to the state of being busy either as an individual or society as a whole, doing commercially viable and profitable work. The term "business" has at least three usages, depending on the scope — the singular usage (above) to mean a particular company or corporation, the generalized usage to refer to a particular market sector, such as "the record business," or the broadest meaning to include all activity by the community of suppliers of goods and services. However, the exact definition of business, like much else in the philosophy of business, is a matter of debate.
Business Studies, the study of the management of individuals organizing to maintain collective productivity toward accomplishing particular creative and productive goals (usually to generate profit), is taught as an academic subject in many schools.
Sole proprietorship: A sole proprietorship is a business owned by one person. The owner may operate on his or her own or may employ others. The owner of the business has total and unlimited personal liability of the debts incurred by the business. Partnership: A partnership is a form of business in which two or more people operate for the common goal of making profit. Each partner has total and unlimited personal liability of the debts incurred by the partnership. There are three typical classifications of partnerships: general partnerships, limited partnerships, and limited liability partnerships. Corporation: A business corporation is a for-profit, limited liability entity that has a separate legal personality from its members. A corporation is owned by multiple shareholders and is overseen by a board of directors, which hires the business's managerial staff. Cooperative: Often referred to as a "Co-Op business" or "Co-Op", a cooperative is a for-profit, limited liability entity that differs from a corporation in that it has members, as opposed to shareholders, who share decision-making authority. Cooperatives are typically classified as either consumer cooperatives or worker cooperatives. Cooperatives are fundamental to the ideology of economic democracy.
There are many types of businesses, and, as a result, businesses can be classified in many ways. One of the most common focuses on the primary profit-generating activities of a business:
Manufacturers produce products, from raw materials or component parts, which they then sell at a profit. Companies that make physical goods, such as cars or pipes, are considered manufacturers. Service businesses offer intangible goods or services and typically generate a profit by charging for labor or other services provided to government, other businesses or consumers.
Organizations ranging from house decorators to consulting firms to restaurants and even to entertainers are types of service businesses. Retailers and Distributors act as middle-men in getting goods produced by manufacturers to the intended consumer, generating a profit as a result of providing sales or distribution services. Most consumer-oriented stores and catalogue companies are distributors or retailers. See also: Franchising Agriculture and mining businesses are concerned with the production of raw material, such as plants or minerals. Financial businesses include banks and other companies that generate profit through investment and management of capital.
Information businesses generate profits primarily from the resale of intellectual property and include movie studios, publishers and packaged software companies. Utilities produce public services, such as heat, electricity, or sewage treatment, and are usually government chartered. Real estate businesses generate profit from the selling, renting, and development of properties, homes, and buildings. Transportation businesses deliver goods and individuals from location to location, generating a profit on the transportation costs.
Businesses can be bought and sold. Business owners often refer to their plan of disposing of the business as an "exit plan." Common exit plans include IPOs, MBOs and mergers with other businesses.
