What are Business Activities?

Business Knowledge

Business activities are those activities in which the production of goods and services are provided to the customers. In this direct or indirect production took place. The main motive of the business activity is to earn profit. All the business activities are fully dependent on each other’s processes. If they work together then they will be able to serve customer satisfaction. 

If we provide resources to businesses and tell them to make the product, Then businesses will be able to produce products by lining the resources in a single line like raw material, labor, machinery, etc. all these business activities depend on each other. If one is missing then the business will not be able to make the product. When we form the line of input to produce goods and services, then the goods will be produced and we will be able to sell the goods to the customers.

Business activities are an important part of our life. If the business will not produce the goods, then we will not be able to get the product. Because of business, we get the desired product and in return, we just need to give money to the business. The business helps us to live a high standard of living. 

Types of Business Activities

Business activities are of three types: operating, investing, and financing activities.

Operating Activities

Operating activities are those in the functioning of a business that involves producing goods and services for the customer. Following transactions are included in the operating activities:

  1. Insurance of stock
  2. Loan
  3. Issue of bonds payable
  4. Repayment of loan money
  5. Repayment of bonds payable
  6. Purchase of stock
  7. Cash dividend
  8. stock dividend

Investing Activities

Investing activities follow the operating activities of the business. They follow the long-term investing process. Following transactions are included in the investing activities:

  1. The Purchasing cost of assets
  2. Selling cost of property, plant, and equipment
  3. Purchase of securities
  4. Sale of securities
  5. Buying cost of intangible assets
  6. Selling cost of intangible assets

Financing Activities

Financing activities are those activities where long-term investments, assets are converted into short-term. Following transactions are included in the financing activities:

  1. Issue of stock and bonds
  2. Borrowed from creditors
  3. Payback amount to creditors
  4. Bonds payable cost
  5. The Purchase cost of the entity 

Classification of Business Activities

 Business activities are classified into two groups industry and Commerce.


In industry, the activities are concerned with the manufacturing of the goods and services and with how to generate profit from the produced product. This industry activity is further categorized into three parts: 

  1. Primary activity. Under this activity, we extract natural resources. Things included in these activities are mining, agriculture, plantation, etc. want to get from the activity is in the raw material form and will go to the production stage. 
  2. Secondary activity. Under this Activity, we convert the natural resources or raw material into finished or semi-finished products. Businesses produce various types of goods under this activity such as food, drinks, clothing, and automotive. Manufacturing is the main task in this activity.
  3. Tertiary activity. Under this activity, we provide or give services to business houses and households. Trade, banking, hotel, telecommunications, and transportation are examples of this tertiary activity.


Commerce is the way or medium we offer products to consumers. It works equally with the industry and how customers view the product through any medium. E-commerce sites are the best example of commerce.

  1. Trade: Trade is the channel between the industries and the consumers, they are responsible for the distribution of products and services to the end-users of the company.
  2. Auxiliaries to Trade: This is not any special process. It is a simplified trading process. In this service synchronize and manage the buying and selling process for both the sellers and the buyers. Examples of auxiliaries trade are:
    1. Transport and communication
    2. Warehousing
    3. Advertising
    4. Banking
    5. insurance

How do business activities affect business strength?

Business activities do not put an impact on business strength but the way of doing business activities can put a major impact on business activities.

Every business owner does activities that are required in business but everyone has special techniques to perform and from them, some owners achieve success and some achieve nothing so the technique that they use to perform business activities is matters. 

Here the meaning of technique consists of strategies, budget, quality, mental power, manpower, and financing power are so important, without these things we can’t perform our business activities smoothly. For accuracy, we need to plan and prepare these things and also apply them at an accurate time and right place so that each step towards our success can work soundly.

  • Strategies – Make a strategy for our business and doing business activities are the crucial and initial step because it helps us to clear the things and understand the goal of the business. If we don’t involve strategies in our business activities, it can be more complicated to get quick profit for us.
  • Budget – Making a budget is also a crucial part of our business. If we can’t make a budget, we won’t be able to understand how to do the first step or second step due to lack of budget process. The Budget helps us to estimate and evaluate the right process so that we can do business activities with estimated value and can’t do activities with overvaluing.
  • Quality – While performing business activities, we need to be concerned about the quality because it plays an important role in business activities. If your business would be a quality performance so your business will grow but if your business would not be a quality business so your business will not grow.
  • Mental Power – Here power defines the mental or mind power that should always be in the business owner to run their business with profitability. Without using mental power, we can’t take a step out towards our business and can’t reach our business on a top level because ideas come from the mind and if we will not use the mind, we can’t generate ideas.
  • Manpower – Manpower defines humans in the form of workers or employees. With a team of workers or employees, we can’t perform business activities fast or in the proper manner. With less manpower, we can lose the manpower department and can’t exceed our business on the next level.
  • Financing power – We all know that financing power is the initial plan in our business that needs to be planned before moving forward. Financing power is the real power of the business, without which business can’t be imagined or proceed. With financing power, we create financial plans that help to solve business finance queries and finance problems.

Do contingency plans include business activities?

Yes, of course, it includes. Every activity that happens in business and puts an impact on business or that is done for business includes in business activities.

Business Contingency plans are also part of the business activities that are prepared for upcoming business good or bad events. Those events can have a good impact or bad impact and may dip our business into liquidity. Such events are earthquakes, Cyclones, Tsunami, Draught, and on the other hand, such events that can happen in business are business huge losses. So for these events, every business owner is always ready for their plans so that they can meet and systematically cover all these and these plans are prepared by the planning advisor with financial analysts as well as consultants at the beginning of the business with the business structure.

Contingency plans help us to recover from those events and help to move for further activities. The business activities are done by all the members of the business whether it is a business owner, employees, employer, managers, analysts, consultants, all of them balance the performance of the profitable business.

Do business activities define the performance of the business?

No, it doesn’t but its result defines. Business activities are done by the business organization and how it is done, that’s a matter for business growth. It involves all the economic activities and non-economic activities that are done in the business to run. These business activities decide the performance of the organization such as operating, investing, and financing activities, it depends on each other and the ratio of performance of three activities decides the performance of the business. That’s why we are saying if we want to get a good performance we have to follow some steps that as we said above like strategies, budgeting, manpower, financing power. If they are all perfect, you can make your performance better.

The business around the distribution, selling, production, manufacturing, if these are done perfectly with proper resources so it can be easy to earn goodwill for the business.

Production – Manufacture- Distribution – Selling 

Production is the first step of making a product in which we have to collect your item to build a product. After completing the production process, product manufacture is the next step with a bulk of items so that we can make a specific product that we want. After manufacturing the product, we have to distribute the product based on the same quality and quantity. The last but not easy process is selling. Selling the product is tough as much as other processes in which we have to convince customers to buy a product by defining our product quality and benefits. 

Advertising through the sales team 

The products need to be advertised by the sales team or media channels, social channels so that our product becomes a brand and customers can attract. Sales team experts sell company products because they use techniques by which customers attract fast and buy products. If the business will continue advertising and promotion through the sales team, the business can grow quickly.

The other advertising method, social platforms, and media channels can be more expensive than the sales team because it contains additional expenses that can be out of the business startup budget.

Read more…