Define Business and discuss the major functions of a Business

Definition of Business :-
"As an institution organized by a person or a group of persons to produce or distribute goods or services with an incentive of earning profit through the satisfaction of human wants. The element of risk is also involved in it."

Business involves the all the human activities which are perform to earn profit. There are various kinds of human activities which include in business, Like purchase, sale, transport, finance and production of goods.

FUNCTIONS OF A BUSINESS

Following are the important functions of the business :

1. Risk Taking Function :-
In a business every moment there is a chance of loss. For example price of the product may fall suddenly. There is also a chance of property destruction. So it an important function of a businessman that he takes the risk and starts the business.

2. Management :-
The basic function of the businessman is to manage the business. Management solves many problems like starting , operating, planning, staffing and controlling the business. The management has also to provide direction for all the subordinates.

3. Planning :-
To organize the business is an important function of a businessman. While organizing the business a businessman has to decide that what work each worker has to perform has also to fix the responsibility of each worker. He has also to distribute the authority for each worker. The businessman also establishes the relationship between the officers and workers of his enterprise. Because it will increase the production and sale of the product. So profit of businessman can increase due to better organizational planning.

4. Financial Function :-
Money plays very important role in business. Without capital a businessman can not establish and expand the business. When a firm has not sufficient amount , it borrows the money from banks and other financial institutions to operate the business. Credit control loans, wages, purchase and sale discount are the financial functions.

5. Innovative Functions :-
Today there is a stiff competition in the business market. Innovation is essential for the business advancement. A businessman keeps in view the needs and wants of the consumer introduces new goods according the demands of the peoples. So he tries to find out new productive techniques and new forms of business organization.

6. Payment of Rent Wages and Interest :-
A businessman hires the other factors like land labour and capital to produce goods and services. He pays the reward to these factors in the shape of rent, wages and interest. After making the payments renaming money he will keep in his own pocket as a profit.

7. Production Function :-
A businessman combines the factors of production and produces the goods with object of earning profit. A businessman conducts this process for his own profit.

8. Use of Technology :-
A businessman also uses the technology and new methods of production according to the nature of his business. It increases his profit.

9. Optimum Combination :-
A businessman tries to combine the factors of production in such a way that cost of production should be minimum and profit should be maximum.

10. Improvement In quality :-
A businessman also improves the quality of the product to increase his sale. Otherwise he will suffer a loss.

11. Sales Function :-
It is very difficult Job of the businessman because there is a hard competition on each market. A businessman also performs various other duties before selling like grading sorting and packaging.

12. Transportation and Communication Function :-
Transportation and communication functions performed by the businessman. It involves transfer of goods from one hand to another in exchange for money.

13. Social Function :-
In urban areas pollution is increasing due to industrial expansion. So business should also share the cost of pollution. It is responsibility of business to reduce the ills of the society.

14. Sound Organization :-
There is a need of sound organizational structure for the business. It will use the sources properly and will increase the profit and production.

15. Motivation :-
It is an important function of a business. It encourages employees to give their best performance to achieve the objectives.