All economic activities are divided into three categories.
(a) Employment
(b) Profession
(c) Business.
(a) Employment is a contract between employer and employee whereby the employee agrees to work on pre-fixed terms and conditions for an employer for a fixed wage or salary. There is no risk associated with employment as wages or salary is pre-fixed.
(b) Profession includes those activities, which are requiring special knowledge and skill to be applied by individuals in their occupation to earn fees. A professional also takes a minimal risk of whether he will get clients or not.
(c) Business refers to those economic activities, which are connected with production, purchase and sale of goods or supply of services with the main object of earning profit. Since there is no pre-determined contract, return which is profit, is not fixed. There may be profits in millions or there may be a heavy loss. Therefore, business as an economic activity is different from other economic activities mainly due to profit. However, there are other differences as well. For example, a business man does not need specific qualifications as required in a profession. A businessman has relative more freedom than a person who is employed or is a professional.

It is incorrect to assume there can be only one objective of a business. Peter F. Drucker remarked, "To Manage a business is to balance a variety of needs and goals. And this requires multiple objectives." Thus, the management of a business must set objectives, in every 'key area' that influences its survival and growth. Peter F. Drucker has suggested eight key areas where objectives must be set. These are discussed below:
(i) Market standing: It refers to the market position of a business in relation to its competitors, e.g. position of 'Liberty' against that of 'Bata'. A dynamic enterprise must aim at increasing its market standing by offering better products at competitive prices and winning permanent customers.
(ii) Innovation: It means the introduction of new products, new uses of existing products, or new methods of production. Innovations are essential for a business enterprise to grow in the competitive world. For example, LG introduced door cooling technology in refrigerators.
(iii) Productivity: It is the ratio between output and inputs in the production process. Productivity is often used as an indicator of the efficiency of an organization. More productivity will lead to reduced cost of production. (iv) Employee satisfaction: An organization must also aim at moulding the attitudes of employees so that they may contribute better towards organizational goals. It is also important to provide such working conditions to employees that they feel satisfied in working with and for the organization.
(v) Resources-Physical and financial: A business enterprise requires many physical and financial resources. A business must aim at procuring these resources.
(vi) Managerial performance: A team is entrusted with the tasks of planning, organizing, staffing, directing and controlling which is called management. Management needs to set targets in the areas of planning, organizing, staffing, directing and controlling and also overall targets for the development of the organization.
(vii) Social responsibility: A business is a part of society. There are some responsibilities of business towards society like generating employment, using ecofriendly methods of production, etc. I must fulfill these responsibilities.
(viii) Profitability: Consider all the above objectives. They are either not possible to be attained without profits like consumer wants good quality. So for market standing we need to provide good quality product which can be provided only when we have enough profits. Similarly, employees want good monetary and non-monetary benefits which are dependent on profits. Some other objectives contribute towards higher profits like innovation and managerial performance. Therefore, we can conclude that the main aim of a business is to earn profits and other aims are either an outcome of the profits or profits are not possible without these.

Yes, we agree. We cannot think of any business which is risk free. You start a general store-the simplest business. There is a risk of things you buy getting wasted due to changes in demand pattern. You start a garments shop, fashion may change making your stock a waste and so on. There is not even a single business where there is no risk. It will be clearer when we look at the nature and causes of risk.
Nature of Business Risks
1. Business risks arise due to uncertainties: Natural calamities, change in demand and prices, change in technology, etc. are some of the examples of uncertainty which create risks.
2. Risk is an essential part of every business: No business can avoid the risk. Risk can be minimized, but cannot be eliminated.
3. Degree of risk depends mainly upon the nature and size of business: For small scale business it is less and for large scale business it is more.
4. Profit is the reward for risk taking: An entrepreneur bears risks and in consideration, he gets rewarded in the form of profit. Greater the risk higher is the chance of profit.
Causes of Business Risk
1. Natural causes: These are beyond human control, e.g., flood, earthquake, heavy rains, famine, etc.
2. Human causes: It includes carelessness or negligence of employees, e.g. theft, strikes, riots, misappropriation of cash and goods, etc.
3. Economic causes: These are related to a chance of loss due to changes in market condition, e.g., fluctuations in demand and prices, competition, change in technology etc.
4. Physical causes: Mechanical defects or failures may also lead to losses, e.g. bursting of the boiler or machine may cause death or destruction.
5. Legal and Political Causes: These causes of business risk include:
(a) Changes in government policies regarding foreign trade
(b) Entry of multinational companies
(c) Changes in laws affecting the business like to license, taxation, etc
(d) Changes in consumer laws and labour laws.
Think of any business. Risk in one way or the other must be applied to it. Hence, we may conclude that no business is risk free.

Following factors are considered while starting a new business:
1. Selecting the line of business: The first thing to be decided by the entrepreneur is the line and type of business to be undertaken.
2. Scale or size of business: After deciding the line of business the businessman must decide whether he/she wants to set up largescale or small scale business.
3. Choice of form of business organization: The next decision must be taken is to finalise the form of business i.e., to set up sale, proprietorship, partnership or joint stock company.
4. Location of business enterprise: The entrepreneur has to decide the place where the business will be located. Before taking this decision he/she must find out availability of raw materials, power, labour, banking, transportation etc.
5. Financial requirement: The businessman must analyse the amount of capital he/ she might require to buy for fixed assets and for working assets). Proper financial planning must be done to determine the amount of funds needed.
6.Physical facilities: It includes machinery, equipment building etc. This decision depends upon the size, scale and type of business activities he/she wants to carry on.
7. Plant layout: Showing the physical arrangement of machines and equipment needed to manufacture a product.
8. Competent and committed workforce: The entrepreneur must find out the requirement of skilled and unskilled workers and managerial staff to perform various activities.
9. Tax planning: The entrepreneur must try to analyse the types of taxes, because there are a number of tax laws in the country which affect the functioning of business.
10. Setting up the enterprise: After analysing the above mentioned points carefully the entrepreneur can start the business which would mean mobilising various resources and completing legal formalities.

The term 'business risk' refers to possibility of inadequate profits or even losses due to uncertainties e.g., changes in tastes and preferences of consumers, strike, increased competition, change in Government policy etc. These are of two types: speculative and pure.
Causes of Business Risks
1. Natural causes: The causes which are beyond human control e.g., flood, earthquake, heavy rains, famine etc.
2. Human causes: It includes carelessness or negligence of employees e.g., theft, strikes, riots, misappropriation of cash and products etc.
3. Economic causes: It is related to a chance of loss due to change in market condition e.g., fluctuations in demand and prices, competition, change in technology etc.
4. Physical causes: Mechanical defects or failures which may also lead to losses e.g., bursting of boiler or machine, may cause death or destruction.
5. Other causes: These include unforeseen events like political disturbances, fluctuation in exchange rates etc.

Since a business has to balance a number of needs and goals, it requires multiple objectives.
Business is dependent on many people's satisfaction whose objectives for being involved in it are different and many times conflicting. Owners want profits, employees want good working conditions and remuneration, investors want good return and consumers want good quality product. Therefore, a business needs to have multiple objectives. Some of these objectives are given below:
(a) Market standing: Business can survive for a longer period only if it is able to capture a big share in the market and has market standing.
(b) Innovation: It means developing new products and their multiple uses. Old customers can be maintained and new can be attracted by innovation only.
(c) Improving productivity: Every business enterprise must aim at greater productivity by making optimum use of available resources.
(d) Earning profit: One of the objectives of business is to earn profits on the capital invested. Every business must earn a reasonable profit to survive and grow.
(e)Optimum use of physical and financial resources: Every business requires physical (plant, machine, office etc) and financial resources (money or funds) to produce goodsand services; the business enterprise must aim to use them efficiently.
(f) Workers performance and attitude: Ev.ery business enterprise must aim at improving its workers' performance and creating positive attitudes towards workers. It will boost the morale of the employees.
(g) Social Responsibility: A business is a part of society and so it must meet the expectations of the society. It can set goals in the areas of the environmental protection, supply of desired quality of products, employment generation etc.

Commerce refers to all those activities which are concerned with the transfer of goods and services from the producers to the consumers. It embraces all those activities which are necessary for maintaining a free flow of goods and services. It includes trade and auxiliary to trade.
Commerce = Trade + Auxiliary to Trade
1. Trade: Trade refers to buying and selling of goods and services with the objective of earning profit. It is classified into two categories.
(i) Internal Trade: It takes place within a country. Internal trade is classified into two categories-retail trade and wholesale trade.
(ii) Retail Trade: It refers to buying of goods and services in relatively small quantities and selling them to the ultimate consumers.
(a) External Trade: It is done between two or more countries. External trade can be classified into three categories.
(b) Import Trade: If goods are purchased from another country, it is called import trade.
(c) Export Trade: If goods are sold to other countries, it is called export trade.
(d) Entrecote Trade: Where goods are imported for export to other countries e.g., Indian firm may import some goods from America and export the same goods to Nepal.
2. Auxiliaries to Trade: All those activities which help in removing various hindrances which arise in connection with the production and distribution of goods are called auxiliaries to trade. An overview of these activities is given below.
1. Transportation and Communication: The production of goods takes place at one place whereas these are demanded in different parts of the country. The obstacle of place is removed by the transport. Along with transport, communication is also an important service. It helps in exchange of information between producers consumers and traders. The common communication services are postal service, telephone, fax, internet etc. 
2. Banking and Finance: Business needs funds for acquiring assets, purchasing raw materials and meeting other expenses. Necessary funds can be obtained from a bank.
3. Insurance: It provides a cover against the loss of goods, in the process of transit, storage, theft., fire and other natural calamities.
4. Warehousing: There is generally a time lag between the production and consumption of goods. This problem can be solved by storing the goods in warehouses.
5. Advertising: Advertising brings goods and services to the knowledge of prospective buyers. It is through advertising that the customers come to know about the new products and their utility.

Different types of industries are as follows:
1. Primary industry: Primary industry includes all those activities, which are connected with extraction and production of natural resources and reproduction and development of living organisms, plants, etc. Primary industries are of two types.
(i) Extractive: It refers to those industries under which something is extracted out of the earth, water or air. e.g., coal, iron, gas etc.
(ii) Genetic: It refers to those industries under which the breed of animals and vegetables are improved and made more useful e.g., poultry farms, tree planting etc.
2. Secondary Industry: Secondary industry includes all those activities, which are connected with using the materials, which have already been extracted at the primary stage. It is of two types.
(i) Manufacturing: These industries convert raw materials or semi finished products into finished products. e.g., paper from bamboo, sugar from sugar cane. It has further been divided into four parts.
(ii) Analytical: Different things are manufactured out of one thing e.g., petrol, diesel, gasoline out of crude oil.
(iii) Processing: Those industries wherein useful things are manufactured by making the raw material to pass through different production processes e.g., steel from iron ores.
(iv) Synthetic: Many raw materials are mixed to produce more useful product e.g., paints, cosmetics etc.
(v) Assembling: The parts manufactured by different industries are assembled to produce new and useful product e.g., computers, watches etc.
(vi) Construction Industry: Such type of industries include construction of roads, bridges, buildings etc.
3. Tertiary or Service Industry: Tertiary industry includes all those activities, which are concerned with providing support services to primary and secondary industries as well as activities relating to trade. It includes banking, finance, insurance, communication, transportation etc.

Characteristics of business are as follows:
1. An economic activity: All business activities are economic activities and are done for the sole purpose of earning money.
2. Production and procurement of goods and services: A business activity involves production or procurement of goods and services. A manufacturer is involved in production, while a shopkeeper is involved in procurement.
3. Sale and exchange of goods and services for the satisfaction of human needs: Sale and exchange of goods and services is done to satisfy human needs.
4. Dealing in goods and services on a regular basis: One time dealing in goods or services cannot be termed as a business. The business should happen on a regular basis.
5. Profit earning: Profit earning is the fundamental motive of doing a business. Other objectives cannot be attained without it.
6. Uncertainty of returns: Returns can never be certain in business activity. This happens because of external factors which are outside the control of the business organization.
7. Element of risk: An element of risk is always present in business activity