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Business is an economic activity that brings people together to help them use their skills and talents to achieve a specific financial goal.
At first glance, one might think that economics and business are equivalent definitions. Indeed, they overlap very closely, but the words themselves have very different origins. Economics (Greek oikonomia) is first and foremost a house, a household, and the rules of this household. A business is a business that is always aimed at making a profit.
Economics has a broad meaning, it can be divided into two kinds:
Microeconomics – the economics of each particular business;
Macroeconomics – the economy at the state level.
The history of the economies of the leading countries of the world confirms the strong influence of business on the development and formation of the country. A market economy will not have growth in the absence of a rational combination of large, medium and small businesses.
Many people don’t just want to start a business, they want to start a private business.
Any business is not only a way to make money, but also to realize individual talents, education, and abilities.
At the heart of business activity is the interaction of business not only with consumers, but also with the state, as a subject of economic activity. These relationships are regulated by the market economy and based on agreements between market participants.
Modern society is built on needs. Food, shelter, clothing, entertainment – the basic needs of people. But these are not all of the desires of people. It is on wants and needs that every business and economy is built. The only difference is that the economy does not cover the broader needs of an individual, but of the entire society of a particular country.
Business or entrepreneurship covers the needs of a particular group of people. The manufacture of automobiles or computers, the sale of various goods, the provision of household services. It is the activity of people in any branch of the economy that is a business.
What characterizes a business?
The economy of business has a simple mechanism. It consists of an endless cycle of repetitive transactions which create 3 forces that drive an economy:
Productivity growth.
Short-term credit cycle.
Long-term credit cycle.
Risk
Any entrepreneurial activity has risks. In order to reduce risks, a business plan is made. It calculates different ways and options, as well as how much money is needed to start your business.
Profit
It is the income that distinguishes a business from a hobby. Profit is the difference between income and expenses. It is always positive, otherwise it is a loss.
The Deal
A business works when there is a constant transaction. That is why it is the transaction which characterizes a business. The essence of a transaction is this: the buyer exchanges money or credit for goods, services, or financial assets of the seller. States, businesses, firms, people-all make transactions.
Why does the economy need a business?
Small and medium-sized businesses are the backbone of a strong state economy. They are the ones that provide jobs and help the entire economy grow. If there are only big businesses in the state, it is a global dependence of the government on them. If one of these large businesses closes down, there will be high unemployment and, consequently, the criminogenic situation will worsen. Small businesses through a large number of services and small firms can always balance and provide jobs. Barbershops, car washes, and restaurants all provide large numbers of jobs.
