Business Makers

Earning of profits is very necessary in business due to the following reasons:

1. Reward for risk bearing: Business is full of risks. No one will take the risk without the incentive of profit. Profit is the motivating force because it serves as a reward for bearing the risks of business.

2. Survival: No business can survive for long without earning profits. Profis are the lubricants that drive the wheels of business. A business can maintain its profit earning capacity by replacing its obsolete assets.

3. Growth and expansion: Profits are he internal source of finance or the expansion of business. A business can grow if it continues to develop new products, services, markets and processes. For this purpose continuous research and development is necessary .Profits provide the capital for research and development. Reinvestment of earnings is the best method of financing expansion and growth of business.

4. Reputation: A profit –making business commands prestige and recognition in society. Goodwill helps business to obtain funds and attract talented employees.

5. Measure of success: Profit is the indicator of success in business. More efficient a business is, greater are its profits. Profit is the index of performance of businesses.

6. Means of livelihood: Profits provide the means of livelihood to businessmen and their families.

Structure Of Business

Structure of business means the way business activities are organized. The broad categories of activities which together constitute business is known as the structure of business. Study of the structure of business involves understanding various categories of business activities. Business activities may be classified on the basis of six (small scale and large scale), ownership (private sector, public sector and joint sector) and function (industry and commerce).