Learn about the definition of a business, the difference between a business and a company, and the different types of businesses that exist.
A business is an activity, occupation, system, or method that aims to obtain an economic benefit, generally through the performance of activities of product production, product marketing, or service provision that benefit people or other businesses.
In this case, examples of a business are a web page where free information is provided, and income is generated through the placement of advertisements, the purchase of a house, and its subsequent rental and the purchase of clothing in a market. Wholesaler, and its subsequent sale in a clothing store.
A business is an entity created to obtain an economic benefit, generally through the carrying out of product production activities, commercialization of products, or provision of services, which benefit people or other businesses.
In this case, examples of a business are an automobile factory (business dedicated to the production of products), an auto parts store (business dedicated to the commercialization of products), and an auto mechanic workshop (business dedicated to the provision of services).
Difference between a business and a company
The difference between a business and a company is that a company is also an entity created to obtain an economic benefit, generally through the performance of product production activities, product marketing or service provision, which benefit people or other companies; but not an activity, occupation, system or method that aims to obtain an economic benefit.
Although the term business is sometimes used only when it is a small business such as a clothing store, a restaurant, or a clothing workshop, not when it is a large company such as a car factory, or a telephone company, the truth is that a business and a company are the same if we take into account the second definition we gave of a business.
To better understand the difference between a business and a company, suppose the case of a person who buys clothes in bulk in a wholesale market, and then retails it in a clothing store.
In this case, the activity of buying clothes and then selling them is business since it is an activity that aims to obtain an economic benefit, while the clothing store is also a business, but also a company since it is an entity created to obtain an economic benefit.
Types of businesses
There are different types of businesses since businesses are usually classified according to various criteria, such as their size, legal form, and scope of operations; However, the main classification usually made to businesses is according to their main activity, which may be:
Extractive businesses are businesses dedicated to the extraction of natural resources, whether renewable or non-renewable.
These businesses are usually medium or large, and have various material resources, specially made up of machines and equipment necessary to carry out their extraction activities.
Examples of extractive businesses are agricultural companies, livestock companies, fishing companies, mining companies, logging companies, oil companies, etc.
Manufacturing or manufacturing businesses
Producing or manufacturing businesses are businesses dedicated to the production or manufacture of products, to the transformation of raw materials or inputs into products intended for sale (final products).
These businesses are also usually medium or large and have various material resources specially made up of machines and equipment necessary to carry out their production activities.
Examples of producing businesses are automobile factories, food factories, furniture factories, textile factories, etc.
Retail businesses or retail businesses are businesses dedicated to purchasing products in quantity and subsequent retail sale.
As main characteristics, these businesses usually have a physical warehouse where inventory is stored, and a location where products are offered and promoted to the public.
Examples of retail businesses are clothing stores, appliance stores, auto parts stores, hardware stores, warehouses, bazaars, pharmacies, etc.
Wholesale or wholesale businesses are businesses that act as intermediaries between producer businesses and retail businesses.
These businesses buy products in quantity from the former and later sell them, also in quantity, from the latter.
Examples of wholesale businesses are beverage distributors, food distributors, construction materials distributors, etc.
Service businesses are businesses dedicated to providing certain services, either to individuals or to other businesses or companies.
These businesses usually have material resources made up especially of the equipment necessary to provide the services, and human resources made up of dedicated workers who also provide them.
Examples of service businesses are restaurants, hotels, beauty salons, gyms, medical centers, law firms, travel agencies, real estate agencies, construction companies, banks, schools, consultancies, garment workshops, repair shops, etc.
Finally, there are online businesses or Internet businesses, which are businesses that operate or are carried out exclusively through the Internet.
In addition to operating or being carried out through the Internet, other characteristics of these businesses are that they usually have a website and, unlike other types of businesses, do not usually have a place where they can produce or sell products.
Examples of online businesses are web pages or blogs that generate income through advertisements, online stores, affiliate programs, etc.
Requirements for a successful business
To finish this article, let’s see below the requirements that a business must meet to succeed:
Offer a very good quality product.
Nowadays, where consumers are increasingly demanding, the main requirement that a business must meet to succeed is to offer a product of very good quality.
A product of very good quality could imply, among other things, a product that uses or is made of first-rate inputs, that has an attractive design that is durable over time, and that fully fulfills the functions for which it was created.
Provide excellent customer service
Nowadays, where consumers like to be showered and have no problem going to the competition if they feel they have been treated badly, it is useless to offer a very good quality product if it is not accompanied by excellent service, to the customer.
Providing excellent customer service could involve, among other things, providing a friendly service, providing prompt attention, providing personalized treatment whenever possible, having a pleasant environment that makes the customer feel at ease, etc.
Having a differentiation
To stand out before so many competitors that exist in the market today, another requirement that a business must meet to be successful is to have a differentiation; that is, with something unique and novel that allows it to distinguish itself from other competing businesses.
A differentiation could be, for example, a function of the product that the other competing products do not have, an extra service that the other competing businesses do not offer, a more efficient system for taking orders or delivering the product, etc.
Finally, today where the life cycle of products is getting shorter, for a business to be successful, another important requirement that must be met is to innovate constantly.
Constantly innovating involves constantly creating and launching new products to the market (which do not necessarily have to be new, but could also be products that are already available, but with new characteristics); but also constantly create and apply new production processes, new ways of serving the customer, new promotion strategies, etc.
In summary, a business can be an activity, occupation, system, or method that aims to obtain an economic benefit (for example, the purchase and sale of clothing) and an entity dedicated to obtaining an economic benefit (for example, a clothing store).
The difference between a business and a company is that a company is also an entity dedicated to obtaining an economic benefit, not an activity, occupation, system, or method intended to do so.
Depending on their economic activity, businesses can be classified into extractives, producers or manufacturing, retail or retail, wholesale or wholesale, services, and the Internet.
Finally, for a business to be successful, the main requirements it must meet are to offer an excellent quality product, provide excellent customer service, have a differentiation, and constantly innovate.