1.01 BME: Why do people start businesses? Term Definition Purposes of Business Profit Profit motive Competition Needs Wants Consumer Goods Services Money that remains after a business has paid for the expenses of running the business. Income > Expenses A person's incentive to work to gain something for himself or herself (that is to make money). Contest between businesses to win customers' business and loyalty Items necessary for existence, such as clothing, food, and shelter. Items that would be nice to have, but are not necessary. A person who uses goods or services. Many times the consumer is also the customer (purchaser). Items businesses sell that can be physically weighed or measured, such as iPods and CDs. Tasks that businesses perform or provide for customers, such as hair cuts and car washes. Types of Businesses Sole proprietorship A business owned by only one person. Partnership A business owned by two or more people. Franchise A contract between a parent company and a franchisee to use the name and sell the goods or services of the parent company, such as KFC. A business whose goal is to provide a service rather than to make a profit, such as the American Red Cross. A business considered separate from the owners of the business by law. The owners are the stockholders. A company that does business and has business facilities in many countries, such as Coca Cola. Non-profit organization Corporation Multinational corporation 1.01 BME: Why do people start businesses? Functions of Business Accounting Management Marketing Information Technology Operations Human Resources The process of recording and reporting the financial data for a business. The process of leading and directing all or part of an organization The process of creating, promoting, and presenting a product to the consumers. The process of developing, installing, and implementing computer information systems and applications. IT includes the support and maintenance of computer hardware and software. The activities involved in the day-to-day running of a business for the purpose of producing value for the stakeholders. The activities that deal with the hiring, firing, training and other personnel (employee) issues.