Business may be defined as human activity directed towards producing or acquiring wealth through buying or selling goods for earning profit. Business has some elements which are essential for continue the organizational activities.
These elements of business are described in below:
- Capital: Capital is one of the important elements of business. No business can be continued except capital. Capital is needed to do any organizational activities. Business has two types of capital. To conduct daily activities need current capital and to buy assets of business need permanent capital.
- Organizational institution: Organizational institute is very important element of business. Large or small whatever the expansion of business that must have the organizational institute and it may be partnership, joint stock, co-operative, national etc.
- Specific location: A specific attractive location is to create more value for the business. The businessman needs a specific place to conduct the business. This place may be a house or open place. The shape of place depends on the type of business and associated activities with the business.
- Labor: Labor is involved with the conducting of business activities. To conduct the activities of business labor is essential. Some businesses need physical labor and some organizations need mental labor. In a sole proprietary business, the owners conduct the task as the owner as well as labor, sometimes in partnership business the partners work in the business but the joint stock company is continued by workers or labors.
- Goods and service: Another important element of business is to produce goods and services and to distribute these to the ultimate consumers. Goods and services are the main elements of any organization. Each type of business is continued on the basis of goods and services whatever they produce or providing service.
- Profit motive: Every organization must have the intention to earn profit. Without profit no organization can continue its operations smoothly. Sometimes profit may invest further to business organization.
- Risk and Uncertainty: There is a proverb “No risk no gain” and the business is directed toward the achievement of several gains. So every business must have risk and uncertainty to be successful. Every businessman can conduct business activities according to his own assumptions. If these assumptions are correct, he gets profit or he becomes successful otherwise cannot be successful in the business.
- Transactions in terms of money: In the barter system there was no fixed medium of transaction but now there is a fixed media. So every transaction of business should be in terms of money. The transactions which are not considered it terms of money are not the business transaction.
- Auxiliary Elements: Auxiliary elements are the supporting elements for conducting business To conduct the business property, it is needed some auxiliary elements. These auxiliary elements are row materials, machinery, furniture, transportation, banking and insurance etc.
- Validity: Validity is an important element of Every activities of the business organization should be valid in the eye of law. Any illegal activities are not considered as business though the business may be conducted to earn profit.
At last can be said that, all these elements that are discussed above are essential for the organization. Without these elements the business organization cannot be existed. If anyone wants to prove the existence of the organization, he should observe the elements of the business.