All types and forms of business represent the relationship between all market participants regarding their joint activities aimed at profit from the use of equity. The business itself is an initiative economic activity, which is provided by own or borrowed funds and at the same time is realized at your own peril and risk, setting itself in the form of the main goals as profit and further development of the business.
Characteristics
Considering business forms as capitalist relations, we can distinguish several of their characteristic features:
- the presence of start-up capital, which is invested in a certain business;
- the presence of a targeted nature of investing start-up capital in the form of income on invested funds;
- the formation of certain relationships with other market participants regarding the use of invested capital, including both the initial and subsequent ones.
Various economic relations affecting several individuals involved in business are so complex and multifaceted that it is almost impossible to define any clear boundaries in this industry. It is for this reason that entrepreneurial activity, which includes various forms of business, is today regarded as a legal concept. This is always a legal form of human activity, carried out within one of the forms of management defined by law.
Structure and objects
Sole proprietors of capital, which are individuals, as well as owners and owners of entire enterprises, referred to as legal entities, are completely free in their market actions as the main objects of business. Today, in countries where there is a developed market economy, there are hundreds of thousands of people who, individually or in groups, risk their own capital, regularly opening more and more new enterprises. It should be noted that quite often you can notice how illegally different forms of business are mixed with the concepts of “commerce” and “entrepreneurship”.
Any family business or other forms represent a certain type of activity in the field of social production, which brings its owner income or any other personal benefits. However, at the same time, not everyone understands that economic activity can be carried out in the field of both material and intangible production, as a result of which this concept will be more correctly divided into:
- entrepreneurship, which is an economic activity in the field of material production;
- commerce, which is an activity in any intangible sphere.
As a result of entrepreneurial activity , various material benefits are considered, while commercial activity is the provision of various services.
Forms
Group, independent and family business can be carried out in three main forms:
- partnership;
- private or individual business;
- corporations.
Private enterprise
In the overwhelming majority of cases, business in Russia and many other countries of the world refers to this particular form, in which only a certain person is considered as the owner, performing simultaneously the functional tasks of the manager. At the moment, this is the most common form, which is typical for enterprises in the field of services, farms, small shops, as well as professional medical, legal and many other types of activities.
Partnership
Partnership is a business in which more than one owner is present. The main advantages of this interaction is that such a business in Russia and many other countries is much easier to implement, since the unification of several people provides a merger of capital and joint ideas. If we talk about the shortcomings, then it is worth highlighting several basic:
- ambiguous understanding of the main goals of the company by all its participants;
- limited availability of financial resources;
- the difficulty of determining the exact share of each participant in the loss or income of the enterprise, as well as in the possible division of property.
Corporation
A corporation, on the other hand, is a certain set of individuals who have decided to unite to conduct joint business activities as a single legal entity. Large and medium-sized businesses include a huge number of such forms, and the right to ownership here is divided depending on the availability of shares. For this reason, it is customary to call the owners of such organizations “holders of shares”, while they themselves are called joint stock companies. It is worth noting that the owners in this case have limited liability for debts, which is determined depending on their own contribution.
Among the advantages of this form, it is worth highlighting the presence of practically unlimited possibilities in terms of attracting money capital through the sale of bonds and shares, as well as the separation of the rights of all holders of shares into personal and property. However, there are a number of disadvantages:
- double taxation of that part of the organization’s income that is customary to pay as dividends to each shareholder: the first is calculated as part of the company's profit, while the second is part of the owner’s personal income;
- rather favorable opportunities for committing a variety of economic crimes, which is most often expressed in the possibility of issuing and further selling shares, which in fact have no real price.
Among other things, the disadvantage of this form of business is the separation of control and ownership functions. Large and medium-sized businesses of this form provide for the dispersal of shares among a sufficiently large number of owners, as a result of which the functions of ownership and control are torn apart. In this case, each owner is interested in receiving the maximum possible dividends, while managers try to minimize them for further use in circulation.
There are also many other shortcomings of corporations, but, one way or another, their advantages significantly prevail over all these disadvantages, and therefore this form of business does not cease to be widely used to this day.
The main types of business
The activities of the overwhelming majority of business entrepreneurs have a fairly large number of similar features, but still there are much more differences, and this is due to the fact that different types of businesses have different situations associated with certain risks and competitive advantages. In the process of implementing all of the above, entrepreneurs are trying to create their own mechanisms for the successful operation of a particular case. In other words, in each individual case, a unique business project and special methods for its implementation are used.
You can also find a fairly large number of differences in the mechanisms used for legal regulation of modern entrepreneurship. It is worth noting that various business projects are also taken into account here, and in order to better study them, business is divided into several types depending on the form of ownership, size and specific industry.
Industrial
This type of business is today considered the leading one and differs in its main function in the form of organizing the production of certain products. This includes various companies involved in the production of clothing, cosmetics, perfumes, pharmaceutical products, as well as many other organizations. Today, production is the most common, but at the same time, the most complex form. However, such a business in Moscow and other cities of Russia is a platform that forms the modern market economy of the country. Within the framework of such a case, the transformation of raw materials into products ready for subsequent sale is carried out.
Conducting such a business is impossible without the entrepreneur buying a certain number of production factors. For the manufacture of goods you need to use certain working capital in the form of a working room, the necessary materials, as well as various devices and other equipment. Also, do not forget that such a business in Moscow, as in any other city, cannot be carried out without knowledge of appropriate technologies, and the fixed assets acquired by an entrepreneur almost always differ in a sufficiently long service life, so you should not hope for that that their value will already be transferred to finished products over a single cycle. All this leads to a rather long-term freezing of the financial assets of the owner.
In addition to raw materials, an entrepreneur who decides to open a new business of this kind must spend money on attracting labor, delivering all necessary materials, as well as renting or purchasing storage facilities in which they will be stored. Also, do not forget about warehouses for finished products, carrying out all kinds of repair work, regular training of employees and many other things, most of which are initially impossible to calculate and identify.
The main disadvantage of such a business can be called the fact that each business enterprise pays off for a sufficiently long time and brings real profit much later in comparison with other types. That is why this type of activity is often supported by the state.
Commercial
The commercial business is based on the sale of various products. In this case, entrepreneurs open a new business as merchants or traders, engaged in the sale of goods purchased in a particular production in bulk. Pharmacy chains, online stores, retail points of sale in the city, gas stations - these and many other organizations are commercial activities.
At the same time, one must correctly understand that in the process of passing the path from producer to consumer, the product does not change in any way. Thus, consumers quite often do not think about how best to deliver the right product from the manufacturer, and a business store presents all the products with maximum comfort. It is worth noting that the trader falls not only on what he can earn on the difference between the original producer price and retail sales, but also the risk of risks associated with price fluctuations or changes in demand.
This type of business is the simplest and clearest when compared with production and many others, and its main advantage is the ability to create and promote as quickly as possible. With the availability of Internet access today, the issue of advertising and attracting consumers is solved almost instantly. The initially created “local” business can be further developed without problems to a regional or state level, and general consumer goods can be sold all over the world. That is why such business ideas with investments at a minimum level are so widespread.
It is also impossible not to say that commercial activity is characterized by a rather high profitability. Around the world, approximately 10% of the profitability of the business depends on production, while the commercial side of the issue affects 30% or more. The risks of such a business are manifested only in high dependence on market conditions. The effectiveness of conducting business involves certain knowledge of the intricacies of marketing, public speaking talent and other important qualities.
Financial representation
The financial business is rightfully considered a special type of entrepreneurship, since here loans and cash flow are the business area. Such a business is entirely based on banking, insurance and venture capital, and the competence of financiers can often be found in operations with foreign currencies and securities. This area is fully occupied by brokers and dealers. Entrepreneurs-financiers earn through various financial transactions, as well as upon receipt of dividends and interest. Examples of this kind of business are known to everyone: banks, brokerage houses, etc.
In the modern world, such a business is considered to be the most risky, and it is for this reason that there is such a strong state regulation that only a few manage to survive. In the vast majority of cases, firms operating in the financial environment are large players with significant competitive advantages:
- flexibility;
- the ability to quickly accumulate resources;
- sufficiently high mobility of resources;
- interaction with international financial markets.
Thus, today almost everyone can open their own business if they are confident enough in their abilities and have a certain starting capital. At the same time, there is no need to worry much about the latter lately, since if you have a full-fledged business plan today, you can easily get a loan from a bank in order to open a small business online or even a small business.