The characteristics of business are as follows:
(a) Objective of profit:

• Profit is the primary motive of business.
• Profit is necessary for the survival and continuity of the business.
• In absence of profit the business is quite likely to shut down.
• Moreover, how well is the business performing can be known by measuring the profits it earns.
  Profit is the barometer of business.

(b) Exchange of goods and services:
Business is done by exchanging goods and services.

• This exchange then leads to profit.
• A manufacturer produces goods and sells them to buyers. In addition to selling the goods he also provides several after sales services such as installation, repair, return, etc. to his buyers.
• Apart from manufacturers there also exists seller of services i.e. service providers who sells the services and earn profit.
• For example, Samsung Company manufactures mobile phones and sells them to earn profit whereas Vodafone sells mobile services to customers and earns profit.
• Thus, business involves exchange of tangible (physical) goods and intangible services.

(c) Risk and uncertainty:

• There always lies risk of uncertainty in business.
• Risk can be either man-made or natural.
• Man-made risks include fire, accident in factory, strike of employees, riots, robbery, thefts, change in preferences of customers, decreased demand, changes in life-style, taste or habits, competition, changes in technology, etc.
• On the other hand natural risks could be earthquake, flood, tsunami, etc.
• A business may get badly affected, may make huge losses and may even get shut down due to such risks.

(d) Creation of utility:

• In commerce, utility ’ can be defined as the ‘capacity of goods or services to satisfy human wants’.
  Creation of utility (OR creating utilities):
• One of the major characteristics of a business is to create utility (i.e. usefulness) for a product or a service. This is called ‘creation of utility’.

A business can create utility in three ways:
1. Form utility:

• • If a person changes the form (i.e. shape, size, etc.) of a commodity to make it sellable we say he has created ‘Form utility’.
  • For example, making ice-cream from milk.

2. Place utility:

• • When goods are carried from place of production to place of consumption i.e. to the customers, we say ‘Place utility’ is created.
  • For example, when we transport food grains from farms to market yards/ consumers we say we have created ‘Place utility’.

3. Time utility:

• • When a manufacturer produces goods and stores them when it is not the right time to use such goods and sells them at the right time we say he has created Time utility’.
  • For example, selling umbrellas in monsoon is creation of time utility.

(e) Continuance of activity:

• The various activities, processes and financial transactions of a business should keep on going continuously. This is called continuance of activity. This means business is not a one-shot process.
• For example, if a trader/producer constructs a building for his residence and later sells it and earns profit, if is not business. The reason is this is not a business activity because there is no continuity in it.

(f) Need of money (capital):
Business needs capital (money) all the time. Money is needed to buy raw material, machinery, to give salary, etc. _
A trader needs money to purchase and store goods.

(g) Economic activity:
Business is a part of economic activity with the motive of earning’profit and creating wealth.