What Is Business? - Definition, Concept & Types

In India, most people broadly earn their income in two ways – either by being an employee or a business owner. If you have always dreamt of running your own business venture and giving employment opportunities to others, you must first understand what business is and its different aspects.

 

The term business comes from ‘busyness,’ which literally means being engaged in an activity. In simple terms, business essentially means the practice of buying something at a lower cost, selling it at a higher cost, and profiting from the transaction.

 

A more formal definition of business is an organisation or enterprising entity engaged in professional, industrial, or commercial activities. Broadly speaking, there are two types of business entities: one that does business to earn profit and the other that is a non-profit that carries out charity work.

 

Business ownershipcan be one person, which is called a sole proprietorship, corporation, partnership, etc. Depending on the extent of operations, the business can be small or large.

 

Now that you know the business meaning, let us look at the type of business.

 

Different businesses are categorised based on their hierarchy or bureaucracy. Let's examine the most common types of businesses in India.

 

Sole Proprietorship

 

As the name says, a sole proprietorshipis a business in which a single person owns and runs the business. There is no legal separation between the owner and the business. Thus, the owner bears the onus of tax liability and all other aspects of the business.

 

Partnershipfirm

 

A partnershipbusiness is run by two or more people. In such a business setup, each partner may contribute to the business’s cause in terms of finance or other resources required, and then they share the profits generated in a pre-determined percentage amongst themselves.

 

LLC or Limited Liability Company

 

This is one of the new business structures that first came into existence in Wyoming, the United States of America in 1977, and eventually became popular all over the world. The LLC combines the tax benefits of a partnershipfirm with limited liability benefits of a corporation.

 

The types of business mentioned above are not an exhaustive list; the business types can be categorised based on their size, operations, etc.

 

How to start a business?

 

Starting a new business can be exciting, but it is easier said than done, as it requires careful planning and proper execution. If you, too, have a business plan and want to start your own business venture, here is some essential advice to helpyou get started:

 

• First and foremost, research the size of the market and the business prospects. Know and define your target audience, i.e., the people willing to purchase the products or avail themselves of the service you want to offer them.

   

• Apart from knowing the customers, you also study the competitors, i.e., the businesses doing the same kind of business you want to do.

   

• Create a comprehensive business plan that lists the objectives, marketing strategies you want to employ, financial projections, and operational procedures.

   

• Arrange for the funds, i.e., the initial capital, to cover the initial expenses and any long-term financial requirements you may have to keepthe business running.

   

• Ensure that you comply with all the legal requirements relating to the line of business you want, such as getting licenses, permits, and registrations

   

• Have an effective promotional and marketing strategy in place so that you can be visible to your potential customers and attract them to your business

   

• Stay abreast with the latest trends in your business, and also try to leverage technology as much as possible in your business to make your business more efficient and cost-effective

 

Getting a business loan

 

No matter the kind of business you want to start, you will definitely need funds. And, instead of getting the money you need by borrowing from a friend or relative or even using your life savings, the most feasible and smart option is to apply for a business loan.

 

A business loan is a form of credit that is offered by banks and other financial institutions. It specifically caters to the financial needs of the business organisations. Irrespective of your business's size or sector, you can avail of this credit to cover all your business-related expenses.

 

The key to a hassle-free borrowing experience is to choose the right lender. The lender must offer the loan at an attractive interest rate, provide quick approval and disbursement, and have minimal documentation requirements. One such lender in India is Udyog Plus. It is a part of Aditya Birla Finance Limited and offers a wide range of financial services to all businesses in India, from loans to insurance and more.

 

You can visit the Udyog Plus website to know more about the business loan and apply for it online in a few simple steps. If your loan is sanctioned, you can get the amount credited to your account the same day so that you can meet the financial needs of your business immediately.