Key Points

Economic activities are performed to earn a livelihood, like working in a factory. Non-economic activities are done out of love or sympathy, such as a person helping an elder cross the road.

Business is an economic activity involving the production, procurement, or sale of goods and services on a regular basis with the primary motive of earning profit.

Key features of business include being an economic activity, regular dealings in goods and services, profit earning as a motive, uncertainty of return, and the presence of risk.

Business earns profit, a profession involves rendering expert services for a fee after acquiring specific qualifications, and employment is performing work for others in return for a salary or wage.

All business activities are broadly classified into two main categories: Industry and Commerce.

Industry refers to economic activities concerned with the conversion of resources into useful goods. It generally involves production, processing, breeding, and raising.

Industries are categorized into Primary (extraction of natural resources), Secondary (processing of materials), and Tertiary (providing support services).

Primary industries include extractive (mining) and genetic (cattle breeding) activities. Secondary industries include manufacturing (making steel) and construction (building dams).

Tertiary industries provide support services to primary and secondary industries. Examples include transport, banking, insurance, warehousing, and advertising.

Commerce includes all activities which are necessary for facilitating the exchange of goods and services. It consists of Trade and Auxiliaries to Trade.

Trade is the buying and selling of goods. Auxiliaries to trade are activities that assist trade, such as transport, banking, insurance, and communication.

These services remove various hindrances: transport removes the hindrance of place, warehousing removes the hindrance of time, and insurance removes the hindrance of risk.

While earning profit is a key objective, businesses also aim for market standing, innovation, productivity, and fulfilling social responsibilities for long-term survival and growth.

Profit is essential for a business as it is a source of income, a means for expansion, an indicator of efficiency, and a reward for risk-taking.

Business risk refers to the possibility of inadequate profits or even losses arising from uncertainties or unexpected events. Risk is an inherent part of any business.

Business risks arise from various causes, which can be categorized as natural (floods, earthquakes), human (strikes, negligence), economic (price changes, competition), and other causes like political disturbances.

Key factors to consider before starting a business include selecting the type and size of business, location, financing, physical facilities, and arranging a competent workforce.

In ancient India, documents like 'Hundi' and 'Chitties' were widely used to facilitate the transfer of money and credit, which promoted long-distance trade by reducing the risk of carrying cash.