When we hear the word business, many images come to mind. We may think that this word relates to our job, we may think about a matter. It may be thought of as a purposeful activity, some think economical or commercial dealings, many people choose the definition “an activity concerned with supplying and distribution of commodities.”
Before putting all these explanations into one common definition, we should take them in parts.
In modern societies:
• Business is related with delivering goods or services to the community.
• Business is a medium to earn money to make one’s living in society.
• Business includes managing resources.
• Business can be done for basic purposes: to make a profit, to make money.
• Business can be done solely to serve the public without thinking about profit and making money.
Business consists of all activities to serve goods and services to the community sometimes with the purpose of profit to make money for surviving or excelling, and sometimes for primary objectives other than profits.
The primary activity of business is the exchange between buyers and sellers. Why do people buy and sell? They do it to satisfy their existing needs and wants. But that exchange should be continued because even an already satisfied need or want should be re-satisfied over a period of time. So business is a never-ending process. Therefore in every community big or small, business will always take place between its members.
What are the things or products that are subject to exchange? The goods that are produced could be tangible such as bread, computers, cars, buildings. Some businesses provide services such as healthcare, insurance, entertainment, cleaning, transportation. Goods and services are commonly called products in business life.
For many people business is a profit-seeking activity. To survive, to make money for a better standard of living people are very willing to do business. Profit will be the positive outcome of their serving the needs and wants of the community by providing their products. This is the people’s expectation when doing business. Profits serve as the Incentive for business people to start and operate a business. When business people combine their resources (labor, technology, knowledge, capital), they pay for these. They face some expenditures to create goods or services. They expect more than they spend in the creation of the goods or services. The difference between the revenues collected for those goods or services and payments to create is considered the reward. This reward is called profit in business life.
Organizations in business are any deliberately established groups of people working together in a systematic manner for a common purpose, such as companies, corporations, associations, clubs, units or unions. Most of the organizations are deliberately set to seek profit by serving the necessary products in society. These profit-seeking organizations are the main group in business life. However there are many other organizations deliberately set to do business for their own primary purposes other than making money or making profit. These organizations are called not-for-profit organizations. The government agencies, labor unions or various institutions established in the form of foundations serve the public. They have their revenues to cover all or part of their expenditures. Although they collect revenues, the basic purpose of their being is not for profit seeking but serving the community.
Today there are many not-for-profit institutions all over the world. Their numbers are increasing immensely. Their effects on the communities increase as well. These institutions face the same challenges as those of profit-seeking businesses. Therefore it is correct to say that there are not big differences in operating between the profit and not-for-profit organizations. Many concepts explained in the upcoming sections of this book will apply to both not-for-profit organizations as well as to the profit-seeking companies.
