All those activities that are performed to earn income are collectively called the business. These activities are done with some objective or aim behind them.

 Example: 

A trader sells goods in his shop, or a factory owner produces goods in a factory.

Characteristics of Business: 

(1) It is an Economic Activity – The main aim of the business is to earn a profit. A person does not start a business due to love, affection or care. It is an economic activity. 

(2) Production or procurement of Goods and Services – A businessman undertakes production and distribution of goods and services to earn revenue, and in exchange of this price, he distributes the goods or services to consumers. 

(3) Sale or exchange of Goods/Services – One single transaction of sale or purchase does not constitute a business. Business involves dealing in goods and services on a regular basis. 

(4) Profit Earning – Every businessman, whether small or big, strives to achieve this objective. He invests capital, bears the risks or uncertainties, and endeavours to operate the business successfully. All this is done by him with an expectation of earning a profit. This way, profit is an incentive which motivates him to continue his business. 

(5) Uncertainty of Return – The uncertainty of return here refers to the risk of not getting the return in a proper course of time. Risk is the result of some adverse and unwanted events. Risk is attached to every business. It cannot be separated from the business. Most common reasons that generate risks include a change in fashion, strike, fire, theft, natural disaster, etc. 

(6) An element of Risk – Any business can come into existence when the person who is starting it can bear the risks behind it. Therefore, no business can be started without risk, and thus the businessman is also called risk-taker. 

(7) The satisfaction of Customer – The services of a business depends upon its customers. Therefore, the main aim of every businessman is to fulfil the needs of his customers and satisfy them. 

(8) Service Motto – Other than self profit motto, the aim of every business should also to provide service towards society, therefore, other than marketing, businesses also focus towards earning the goodwill of the society.