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What Is a Business? Understanding Different Types and Company Sizes

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What Is a Business? Understanding Different Types and Company Sizes

What Is a Business?

The term business refers to an organization or enterprising entity engaged in commercial, industrial, or professional activities. The purpose of a business is to organize some sort of economic production (of goods or services). Businesses can be for-profit entities or non-profit organizations fulfilling a charitable mission or furthering a social cause. Businesses range in scale and scope from sole proprietorships to large, international corporations.

Business also refers to the efforts and activities undertaken by individuals to produce and sell goods and services for profit.

KEY TAKEAWAYS

  • A business is defined as an organization or enterprising entity engaged in commercial, industrial, or professional activities.
  • Businesses can be for-profit entities or non-profit organizations.
  • Business types range from limited liability companies to sole proprietorships, corporations, and partnerships.
  • Some businesses run as small operations in a single industry while others are large operations that spread across many industries around the world.
  • Apple and Walmart are two examples of well-known, successful businesses.

Business

Understanding Business

The term business often refers to an entity that operates for commercial, industrial, or professional reasons. The concept begins with an idea and a name, and extensive market research may be required to determine how feasible it is to turn the idea into a business.1

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Businesses often require business plans before operations begin. A business plan is a formal document that outlines the company’s goals and objectives and lists the strategies and plans to achieve these goals and objectives. Business plans are essential when you want to borrow capital to begin operations.1

Determining the legal structure of the business is an important factor to consider, since business owners may need to secure permits and licenses and follow registration requirements to begin legal operations.1 Corporations are considered to be juridical persons in many countries, meaning that the business can own property, take on debt, and be sued in court.2

Most businesses operate to generate a profit, commonly called for-profit. However, some businesses that have a goal to advance a certain cause without profit are referred to as not-for-profit or nonprofit. These entities may operate as charities, arts, culture, educational, and recreational enterprises, political and advocacy groups, or social services organizations.3

Business activities often include the sale and purchase of goods and services. Business activity can take place anywhere, whether that’s in a physical storefront, online, or on a roadside. Anyone who conducts business activity with financial earnings must report this income to the Internal Revenue Service (IRS).4

A company often defines its business by the industry in which it operates. For example, the real estate business, advertising business, or mattress production business are examples of industries. Business is a term often used to indicate transactions regarding an underlying product or service. For example, ExxonMobil conducts its business by providing oil.

A good name is often one of the most valuable assets of a business, so it’s important that business owners choose their name wisely.5

Business Types

There are many ways to organize a business, and there are various legal and taxation structures that correspond with these. Among others, businesses are commonly classified and generally structured as:

  • Sole proprietorships: As the name suggests, a sole proprietorship is owned and operated by a single person. There is no legal separation between the business and the owner, which means the tax and legal liabilities of the business are the responsibility of the owner.6
  • Partnerships: A partnership is a business relationship between two or more people who together conduct business. Each partner contributes resources and money to the business and shares in the profits and losses of the business. The shared profits and losses are recorded on each partner’s tax return.7
  • Corporations: A corporation is a business in which a group of people acts as a single entity. Owners are commonly referred to as shareholders who exchange consideration for the corporation’s common stock. Incorporating a business releases owners of the financial liability of business obligations. A corporation comes with unfavorable taxation rules for the owners of the business.2
  • Limited liability companies (LLCs): This is a relatively new business structure and was first available in Wyoming in 1977 and in other states in the 1990s. A limited liability company combines the pass-through taxation benefits of a partnership with the limited liability benefits of a corporation.8

Business Sizes

Small Businesses

Small owner-operated companies are called small businesses. Commonly managed by one person or a small group of people with less than 100 employees,9 these companies include family restaurants, home-based companies, clothing, books, and publishing companies, and small manufacturers. As of 2021, 32.5 million small businesses with 61.2 million employees were operating in the United States.10

The Small Business Administration (SBA) uses the number of employees working at a company and its annual revenue to formally define a small business. For 229 industry sectors, from engineering and manufacturing to food service and real estate, the SBA sets sizing standards every five years.11

Businesses that meet the standards of the SBA can qualify for loans, grants, and “small business set-asides,” contracts where the federal government limits competition to help small businesses compete for and win federal contracts.12

Mid-Sized Enterprises

There is no definitive specification in the U.S. to define a mid-sized or medium-sized company. However, when large U.S. cities such as Philadelphia, Baltimore, and Boston evaluate the landscape of operating businesses, a medium-sized company is defined as one with 100 to 499 employees or $10 million to less than $50 million in annual gross sales.13

Large Businesses

Large businesses commonly have more than 1000 employees and garner $50 million or more in gross receipts.13They may issue corporate stock to finance operations as a publicly-traded company.

Large enterprises may be based in one country with international operations. They are often organized by departments, such as human resources, finance, marketing, sales, and research and development. Unlike small and mid-sized enterprises, owned by a person or group of people, large organizations often separate their tax burden from their owners, who usually do not manage their companies but instead, an elected board of directors enacts most business decisions.9

Examples of Well-Known Businesses

Apple

Apple is known for its innovative products, including its personal computers, smart devices, and music and video streaming services.

Founded in 1977 by Steve Jobs and Steve Wozniak, Apple became the first publicly-traded company whose value hit $1 trillion.14 The company’s stock trades under the ticker symbol AAPL on the Nasdaq. Intraday trading as of June 7, 2022, hovered around $148 per share, while the market capitalization for the company hit $2.41 trillion.15

The company employs more than two million people, including 80,000 individuals who work as direct Apple employees. The remaining jobs include suppliers, manufacturers, and others who are supported through the Apple store.16 The company reported net sales of $297.3 billion in 2021, driven primarily by its product segment.17

Apple’s key to success lies in its family of products and its ability to innovate. The company focuses on design and quality—two key elements that were a key part of Jobs’ corporate vision. The products that Apple creates and markets can be used under the same operating system, which allows consumers to sync them together, thus lowering corporate costs. Apple’s ability to create, develop, and market new products and services also put it ahead of its competition.18

Walmart

Walmart is one of the world’s largest retailers and operates as a multinational corporation. The company was founded in 1962 by Sam Walton in Arkansas.19 It has more than 10,500 locations in more than 24 different countries and employs over 2.3 million people.2019

The company went public in 1970 and trades on the New York Stock Exchange (NYSE) under the ticker symbol WMT. As of June 7, 2022, Walmart stock traded around $123.37 per share and its market cap was $337.38 billion.21

Walmart earned $559 billion in revenue for the full year of 2021. This figure was driven by online sales through its e-commerce segment and international sales, which were primarily recorded in Mexico and Canada.22

Walmart’s success can be attributed to several factors, including its brand name, pricing, diversification (especially with the addition of its online marketplace), efficient supply chain management, and its financial strength.20

How Do You Start a Business?

There are several steps you need to hurdle to start a business. This includes conducting market research, developing a business plan, seeking capital or other forms of funding, choosing a location and business structure, picking the right name, submitting registration paperwork, obtaining tax documents (employer and taxpayer IDs), and pulling permits and licenses. It’s also a good idea to set up a bank account with a financial institution to facilitate your everyday banking needs.1

How Do You Launch an Online Business?

Starting an online business involves some of the same steps as a traditional business, with a few exceptions.

You still need to do your market research and develop a business plan before anything else. Once that’s done, choose a name and structure for your business, then file any paperwork to register your organization.

Rather than finding a physical location, choose a platform and design your website. Before launching your business, you should find a way to build up your target market, whether that’s through traditional marketing means or more creative ways like social media.1

How Do You Come Up With a Business Name?

Your business name should fit the type of organization you plan to run and it should be catchy—something that people will gravitate toward and remember, not to mention associate with you as well as the products and services you plan to sell. Originality is key. And most importantly, it should be a name that isn’t already in use by someone else. Go online and do a business name search to see if it’s available or already registered.5

How Do You Write a Business Plan?

Business plans are essential to running your business and can help you secure the funding you need to start your operations. You can choose between a traditional or a lean business plan.

A traditional business plan is very comprehensive with a lot of details. This includes a summary of the company and the ways it will succeed. It also includes information about your market, management, products and services, marketing, and sales projections.

Lean formats are shorter but still contain very useful information such as partnership details, outlines of the business activities and customer relationships, cost structures, and revenue streams.

You can find templates online or come up with your business plan document.23

How Do You Get a Business Loan?

Necessary funding for a business often comes via a loan. A traditional lender or a government-backed loan, such as those offered through the Small Business Administration are two options. Prospective lenders want to see business details, especially for new start-ups. Make sure you have your business plan ready, including outlines of costs and revenue streams, and ensure you have a good credit score. You may need to put down some collateral to secure the loan if you’re approved.24

The Bottom Line

Businesses are the backbone of an economy. They provide products and services that can be purchased by individuals and other companies.

Businesses range in size from small to large and operate in many different industries. Business structures also vary from sole partnerships to major corporations that provide shareholder equity to their owners.

When starting a business, do your research and develop a business plan. This allows you to raise the money you need to start your operation.

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Trucking Companies: An Essential Part of the Supply Chain

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Trucking Companies: An Essential Part of the Supply Chain

Trucking companies are a crucial part of the modern-day supply chain, responsible for delivering goods and materials from one location to another. From small-scale local delivery services to large multinational corporations, trucking companies play a vital role in connecting businesses with consumers and ensuring that essential goods reach their destinations in a timely manner.

The history of trucking companies dates back to the early 20th century, when trucks first began to be used for commercial purposes. Since then, the industry has grown exponentially, with technological advancements, changes in regulations, and increased globalization driving the growth of trucking companies around the world.

Trucking companies typically offer a range of services, including local, regional, and long-haul deliveries. They may specialize in a particular type of cargo, such as hazardous materials, or offer a range of services, including warehousing and distribution. Some trucking companies also provide specialized services such as refrigerated transportation, flatbed hauling, or oversized loads.

One of the key benefits of working with trucking companies is their ability to offer flexible, efficient, and cost-effective delivery services. With a large fleet of vehicles and a network of distribution centers, trucking companies can provide fast and reliable delivery services, regardless of the size or type of shipment.

In addition to the delivery of goods, trucking companies also play a critical role in reducing congestion on the roads and highways. By utilizing advanced routing and dispatch systems, trucking companies can optimize their delivery routes, reducing the number of vehicles on the road and helping to minimize traffic delays.

Another advantage of working with trucking companies is their ability to offer a range of value-added services, such as packing, loading and unloading, and custom clearance. These services can help businesses streamline their operations, reducing costs and increasing efficiency.

However, like any industry, trucking companies are not without their challenges. One of the biggest challenges facing the industry today is the shortage of qualified truck drivers, which has led to increased costs and reduced capacity for many companies. In addition, the high cost of fuel, insurance, and maintenance can also pose a significant challenge for trucking companies.

Despite these challenges, the trucking industry continues to play an essential role in the global economy, connecting businesses with consumers and helping to keep the wheels of commerce turning. With a focus on innovation, efficiency, and customer service, trucking companies will continue to play a key role in shaping the future of the supply chain.

In conclusion, trucking companies are an integral part of the modern-day supply chain, offering a range of delivery services that help businesses connect with consumers and ensure the timely delivery of goods. With a focus on innovation, efficiency, and customer service, trucking companies will continue to play a vital role in shaping the future of the industry.

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Landscaping Business: A Guide to Starting and Growing Your Own Business

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Landscaping Business: A Guide to Starting and Growing Your Own Business

Landscaping is a multi-billion dollar industry that offers a range of opportunities for entrepreneurs looking to start their own business. Whether you are an experienced landscaper or just starting out, this guide will provide you with the essential information you need to get your landscaping business up and running.

Step 1: Determine Your Niche

The first step in starting a landscaping business is to determine your niche. Are you going to specialize in residential or commercial landscaping? Do you want to offer lawn care services, garden design, or tree care? It’s important to choose a niche that you have a passion for and that you feel confident in delivering quality services to your clients.

Step 2: Create a Business Plan

Once you have determined your niche, the next step is to create a business plan. Your business plan should include your business goals, target market, marketing strategies, operating costs, and financial projections. This will help you stay focused and on track as you start your business.

Step 3: Register Your Business and Obtain Licenses

Before you start your landscaping business, you need to register your business and obtain any necessary licenses and permits. This will vary depending on your location, so it’s important to check with your local government to determine what you need to do.

Step 4: Invest in Equipment and Supplies

To provide quality landscaping services, you will need to invest in the right equipment and supplies. This may include lawn mowers, trimmers, edgers, and other landscaping tools. You will also need to purchase supplies such as mulch, soil, and plants.

Step 5: Market Your Business

Marketing your landscaping business is essential to attracting new clients and building your brand. You can use a variety of marketing strategies, including online advertising, social media, and local print ads. You can also offer special promotions and discounts to attract new customers and keep your existing ones coming back.

Step 6: Deliver Quality Services

The key to success in the landscaping business is delivering quality services to your clients. Make sure you are providing high-quality workmanship, and always be prompt and professional with your clients. You can also ask for referrals from satisfied customers to help grow your business.

In conclusion, starting a landscaping business can be a rewarding and fulfilling experience. With hard work, dedication, and a passion for your work, you can build a successful landscaping business that provides you with a steady income and a sense of accomplishment.

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Catering Business: A Thriving Industry in the Food Service Industry

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Catering Business: A Thriving Industry in the Food Service Industry

Catering business is a subsector of the food service industry that involves providing food and drinks to clients at various locations such as weddings, corporate events, parties, and other special events. It is a growing and lucrative industry that offers a variety of opportunities for entrepreneurs who have a passion for food and hospitality. In this article, we will take a closer look at the catering business and its prospects for growth in the future.

The Demand for Catering Services

The demand for catering services has been steadily increasing in recent years due to the growing trend of hosting events and parties outside of the home. This trend has been driven by a number of factors including busy work schedules, the desire to create a memorable experience, and the convenience of having everything taken care of by a professional catering service. As a result, catering businesses have become increasingly popular, especially in urban areas where there is a high demand for their services.

Opportunities for Growth in the Catering Business

There are many opportunities for growth in the catering business, including expanding into new markets, offering new and innovative menu options, and investing in technology to streamline operations. For example, catering businesses that cater to specific dietary needs, such as gluten-free or vegan options, have seen significant growth in recent years. Additionally, the use of technology to streamline operations, such as online ordering and delivery systems, has made it easier for catering businesses to reach new customers and expand their reach.

Starting a Catering Business

Starting a catering business requires careful planning, hard work, and a passion for food and hospitality. It is important to conduct market research to determine the demand for catering services in your area, as well as to identify your target market and competition. From there, you will need to create a detailed business plan, secure financing, and develop a strong brand identity.

To be successful in the catering business, you will also need to have a strong culinary background and a good understanding of food safety and sanitation practices. You may also need to invest in equipment such as ovens, refrigerators, and other kitchen equipment, as well as in marketing and advertising to reach potential customers.

Conclusion

The catering business is a thriving industry that offers many opportunities for growth and success. By carefully planning and executing a solid business plan, entrepreneurs with a passion for food and hospitality can start their own successful catering business and make a real impact in the food service industry. With the increasing demand for catering services, the future of the catering business looks bright and full of potential.

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