The term business refers to an organization or enterprising entity engaged in commercial, industrial, or professional activities. The main purpose of a business is to organize economic production of goods or services, be it for profit or fulfilling a charitable mission without profit (non-profit organizations). Businesses can range from sole proprietorships to large, international corporations.
Key Insights
- Business Definition: An organization or entity engaged in commercial, industrial, or professional activities.
- Nature of Businesses: For-profit entities or non-profit organizations.
- Types of Businesses: From sole proprietorships, partnerships, corporations, and limited liability companies.
- Size Variation: From small operations in a single industry to large international operations.
- Examples: Apple and Walmart are prime examples of successful businesses.
Understanding Business Structures
Starting a business entails transforming an idea into a functioning entity through market research and the development of a business plan. Here are the primary business types:
Sole Proprietorship
Owned and operated by a single individual, this type has no legal separation between the business and the owner, making the owner responsible for the business’s tax and legal obligations.
Partnership
A business relationship between two or more individuals who share resources, profits, and losses as recorded on their individual tax returns.
Corporation
Comprising a group of people acting as a single entity, a corporation allows owners, or shareholders, to have limited financial liability. This structure, however, comes with less favorable taxation rules for the owners.
Limited Liability Company (LLC)
A relatively new structure combining the pass-through taxation of a partnership with the limited liability of a corporation.
Business Sizes
Small Businesses
Typically owner-operated with less than 100 employees, small businesses include family restaurants, home-based companies, and small manufacturers. They might qualify for SBA loans, grants, and small business contracts.
Mid-Sized Enterprises
Defined variably but often seen as companies with 100 to 249 employees or gross sales ranging from $10 million to below $1 billion.
Large Businesses
Businesses with 250+ employees and over $1 billion in gross receipts. These entities often separate their tax obligations from their owners and may be publicly traded.
Notable Business Examples
Apple
Known for its innovative products and robust ecosystem, Apple employs over two million people directly and through its supply chains. The company had net sales of $394.33 billion for the fiscal year ending in 2022.
Walmart
As one of the world’s largest retailers, Walmart operates over 10,500 locations worldwide, employing over 2.1 million people. In 2022, Walmart’s revenue reached $611.3 billion.
Steps to Start a Business
1. Market Research: Understand the market and potential for your business idea. 2. Business Plan: Develop a detailed or lean business plan, outlining goals and strategies. 3. Funding: Seek out capital or funding, possibly through loans or investors. 4. Legal Structure: Choose the right business structure and register the organization. 5. Naming: Choose a catchy and unique name that hasn’t been registered by someone else. 6. Documentation: Obtain tax documents, permits, and licenses. 7. Bank Account: Set up a business bank account for operational needs.
How to Launch an Online Business
Starting an online business involves market research, business planning, name selection, and platform building. Use creative marketing techniques, such as social media, to engage your target market before launch.
Naming Your Business
Your business name should be relatable, catchy, and unique. Perform an online search to ensure it’s not already registered.
Writing a Business Plan
A traditional business plan includes a detailed summary, market analysis, and succeeding strategies. Alternatively, a lean plan is concise and includes key details like business activities and revenue streams.
Securing a Business Loan
Necessary funding can come through traditional bank loans or government-backed loans. Be prepared with a comprehensive business plan, a good credit score, and possibly collateral.
Conclusion
Businesses are essential to the economy, providing products and services across various sizes and industries. When starting a business, thorough research and a solid business plan are key to securing the needed funds and setting the foundation for a successful operation.
Related Terms: enterprise, economic production, goods and services, for-profit, non-profit, market research, business plan, capital, real estate, industry.
References
- U.S. Small Business Administration. “10 Steps To Start Your Business”.
- Cornell Law School Legal Information Institute. “Corporations”.
- U.S. Small Business Administration. “Choose Your Business Name”.
- U.S. Chamber of Commerce. “Choosing the Right Nonprofit Type: Which Is Right for Your Business?”
- Internal Revenue Service. “Tax Information for Businesses”.
- Internal Revenue Service. “Sole Proprietorships”.
- Cornell Law School Legal Information Institute. “Partnership”.
- Wyoming LLC. “The Complete History of the LLC”.
- Indeed. “Business Sizes”.
- Small Business Administration. “2022 Small. Business Profile”, Page 1.
- Marketplace. “The SBA Is Changing Its Definition of Small Business”.
- Small Business Administration. “Types of Contracts”.
- OECD. “Enterprises by business size”.
- Indeed. “Midsize Companies: What They Are and Why They’re Beneficial”.
- CNBC. “Apple Hangs Onto Its Historic $1 Trillion Market Cap”.
- Apple. “Two Million U.S. Jobs and Counting”.
- Apple. “CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)”, Page 1.
- Apple. “Apple Makes Business Better”.
- Walmart. “Company Facts”.
- Walmart. “Our Business”.
- Walmart. “Walmart revenue up 7.3% globally with broad-based strength across segments”, Page 1.
- U.S. Small Business Administration. “Write Your Business Plan”.
- U.S. Small Business Administration. “Loans”.
