In economics, a business is a legally recognized organizational entity existing within an economically free country designed to provide goods and/or services to consumers. Businesses are predominant in capitalist economies, where most are privately owned and typically formed to earn profit to increase the wealth of their owners. The owners and operators of a business have as one of their main objectives the receipt or generation of a financial return in exchange for their work and their acceptance of risk. Notable exceptions to this rule include cooperative businesses and government institutions.
The etymology of "business" relates to the state of being busy either as an individual or society as a whole, doing commercially viable and profitable work. The term "business" has at least three usages, depending on the scope — the singular usage (above) to mean a particular company or corporation, the generalized usage to refer to a particular market sector, such as "the record business," or the broadest meaning to include all activity by the community of suppliers of goods and services. However, the exact definition of business, like much else in the philosophy of business, is a matter of debate.
A business is a business when you make a profit after everything you spent for the business is deducted. Believe me, your tax guy or gal will let you know if it is just a hobby! Most businesses are alloted a certain amount of time to "prove" they are a business. If you not in the "black" after the alloted time, you are not considered a "real" business. Talk to your tax professional about this. They will give you the guidelines you need to know when you are officially a business.
Luckiest has given the best overall technical answer as you marked. Let me add a less academic perspective that is peppered with practicalitiy.
A business becomes a business when you decide to treat it like a business by investing your thought, time, energy, effort, and money. You are the leader so you are the most important determinant of your business being a business.
I hope my agency never becomes a business. I hope it remains my passion and joy. I know this may not be what you were asking but I know I need to make money and pay taxes but I do this because I love what I do. I wanted to be free to do what I love.
I think "business" is a title that forces us to believe we have to do things a certain way. I own an agency - I hope it never turns into a business.
That sounds noble on the surface, but is it really practical? That position would scare me a little as a potential client or investor, because it suggests that your management decisions would be based on what makes you happy, rather than what's necessary or beneficial for your clients, employees, and other stakeholders.
When you run the company, a lot of things need to be done (for legal, financial, and moral reasons) that don't exactly fill one's heart with passion and joy. You have to have the discipline to do them, however, because it what's right for the long term health of the enterprise. It's the same reason a parent takes a child to the dentist. Neither of them gets any joy out of that, but the adult makes the responsible decision because it's what right for the health of the child.
Unfortunately, there are a lot of parents and a lot of business owners who have the idea that everything is supposed to be fun all the time -- that there is no pain or sacrifice involved. And some very bad things happen because of that. Now I don't believe that you, personally, are one of those people -- but because so many prospective entrepreneurs seem to adopt this "I am entitled to do things however I want and make money at it" philosophy, I felt compelled to post a counterpoint of sorts. You noted that the term "business . . . forces us to believe we have to do things a certain way." Well, I think we do have to do certain things a certain way, if we're going to have any success. That seems to be the way a civilized world works.
So why even bother being in business? In my case, the passion comes from my company's mission and purpose. What fills me with joy is watching the results that my firm produces as they unfold (sometimes into legacies that will be around long after I'm dead and gone). Quite honestly, if another enterprise were doing this, and if I could make a greater contribution there than I'm making now with my own firm, I'd go to work for them in a heartbeat. Because most days, running a company is just not all that much fun. Yet the results make it well worth it. In fact, I believe that's the heart and soul of a successful small enterprise -- the ability to produce specific results for your customers or clients that a no other business, regardless of its size, can match.
Whenever I've been a part of anything good -- whether it was an athletic team, a military unit, a church group, or a business enterprise -- everyone involved was doing things at times that they didn't enjoy very much -- because we really wanted and really believed in the results that our efforts would ultimately produce. In my opinion, we need more businesses and business owners who are thinking about the ultimate results they're producing, instead of how much fun they're having. Make no mistake, we have fun in my company -- every day. But it's not our prime directive. Doing the right things at the right times in the right ways to produce the right result is.
(Again I don't mean this an indictment of you, personally -- just commenting on a philosophical element that your post seemed to endorse.)
I just have to weigh in on this interesting discussion with middle ground.
Passion does not mean fun, per se. The origins of passion means suffering, a willingness to pay the price. Its roots come from Jesus' crucifixion - re: the movie, The Passion of Christ.
I believe business is a high and noble calling not on the surface, but down deep. When that kind of commitment and belief is in place, then the willingness to do whatever will be sure to follow. (That's why parents make the kind of sacrifice you reference.) Investors and potential clients will recognize, embrace, and value it more than the person who is turning tricks to make a buck. Enthusiasm (root meaning: God within) sells.
But that's you. And I accept that. I enjoy this type of dialogue.
What I am saying is that I approach the agency with doing the best work for the client, not what is profitable. They are not one and the same. I could cut corners and do less, and the clients would not know the difference but I would. I could charge for every minute that I am in communication with a client but I don't like that model. I could use formulated or older work that the client would not be aware has already been done but that's not right for me.
I didn't mention fun on purpose. I am not always smiling and laughing but I do enjoy myself some 94% of the time. I work hard to balance my time so that I get to write everyday, I have to.
I believe we are playing a word game of sorts - business means different things to different people. There are some people who believe you have to dress for business and some who don't. Some believe that all employees need to be in an office while others don't. I am not concentrating on running a business, I am concentrating on running an agency, building a culture of high quality work. I am aware of everything else, very aware but my focus is creating an agency that reflects my beliefs and philosophy, not some idea written in a business text. To some there is no place for feelings or emotions in business, I think for an advertising agency there has to be feelings and emotions.
A lot of times, we study what we think a business should be and try to live up to that model when it isn't right for us. I think a lot of our failures come because we are not working a plan that is best for us. I don't want to do business like the huge corporations, because I don't want to become one of them. The model I follow is outlined in my plan, it behaves and responds the way I need for it to.
I know you were not attacking me, and I am so thankful for the comments. I'm not endorsing people follow me. I am only stating what is right for me. My accountant is both frightened and excited about how I want to approach things - he says I will either make him look like a genius or cause his hair to fall out. But he still wants to handle my finances because I am trying to do something different. I pray it works but if it doesn't - I'll know I did what is right for me.
IWrite, it sounds to me like you want to create an On-Purpose Business. This is one that is real to you. Profitable and makes a difference.
I write On-Purpose Proverbs. One is: "Market in your self interest. Serve in your client's best interest." In other words, position yourself to be in front of clients who accept and appreciate your style and way of doing business, then you can forget about yourself and just take great care of them.
I've been helping clients do what you're describing for a couple of decades. Here's my experience... for the one's who really embrace this, revenues typically increase a minimum of 25% within the first year. Profits do the same of better. The reasons: they are focused and know what to say "yes" to that is on-purpose, and when to say "no" to the off-purpose stuff.
Interesting. I hadn't thought of it this way. This is why I enjoy this forum - between you and Lighthouse, I am encouraged to look at why I do what I do. I understand what I want to but vocalizing it has helped to make it even clearer. I need to be pushed to examine why and how I am doing things. Thank you both.