What is a business

The term ‘business’ encapsulates the concept of an individual or collective endeavour engaged in the creation of goods or rendering of services. When such ventures pursue revenue-generating activities, we typically refer to them as a company. A business may be conducted by various legal entities, ranging from structured organizations to informal associations.

In distinguishing the nature of various enterprises, we categorize them as

• Private
• Public
• Commercial
• Non-commercial
• Not-for-profit

Private Enterprise

The objective of a private enterprise is to turn a profit through the sale of products and services. Except from financial gains, enterprises may want to add value or generate employment opportunities. Private businesses come in many forms, from associations and clubs to sole proprietorships.

An individual may also conduct a business independently, with or without the assistance of employees, and has the option to legally designate the venture as a sole tradership.

The goal of a private business is usually to make profit by selling goods and services. Other goals of a private business can be to create some form of value or create jobs. It can be organizations, associations, clubs, and sole proprietorships.

The most common type of private business is a limited liability company. In a limited liability company, there can be one or more owners, and the ownership is determined by shares.

A person can also operate a business alone, either with or without employees, and have the option to register it as a sole proprietorship.

Public Enterprise

Public enterprises may operate on commercial lines, while others may function non-commercially. These entities are typically funded by fees, taxes, or governmental charges and are either managed by state institutions or local councils. Public enterprises are exemplified by government-owned companies and other state-controlled organizations.

Commercial Enterprise

Commercial businesses includes banks, limited companies, cooperatives, sole traderships, and insurance firms. Driven by profit, these entities operate privately, within the economic marketplace.

Non-commercial Enterprise

Standing in contrast to their profit-seeking counterparts, non-commercial enterprises does not have a goal for financial gain. These are establishments without commercial resale value and are not formed for the purpose of marketing goods or services.

Non-commercial business instances include publicly funded educational institutions, community support organizations, public libraries, and religious or philosophical societies.

Not-for-profit Enterprise

Not-for-profit entities serve particular social, educational, or communal functions. Such organisations, which range from member-driven clubs to philanthropic groups, aim to generate funds for designated causes with voluntary membership.

While these not-for-profit businesses may occasionally engage in commercial activities, their chief aim is to fulfil specific societal roles. Autonomous in governance, they possess the ability to self-regulate and voluntarily disperse as necessary. One could cite health and social care advisory services as an example of a not-for-profit business.

Alternative Organisational Models

The business landscape is also characterised by additional organisational models, including partnerships and joint liability companies.