BUSINESS

BUSINESS

Business is the organized effort of individuals to produce and sell, for a profit, the goods and services that satisfy society’s needs. The general term business refers to all such efforts within a society. However, a business is a particular organization, such as Kraft Foods Inc. to be successful, a business must perform three activities.  It must be organized, it must satisfy needs and it must earn a profit.

            For a business to be organized, it must combine four kinds of resources : material, human, financial, and informational. Materials resources  include the raw materials used in manufacturing processes as well as buildings and machinery[1]. For example, Sara Lee Corporation needs flour, sugar, butter, eggs and other raw materials to produce the food products it sells worldwide. In addition, this Illinois-based company needs human, financial, and information resources. Human resources are the people who furnish their labor to the business return for wages. The financial resources is the money required to pay employees, purchase materials and generally keep the business operating. Information is the resource  that tells managers of the business how effectively the other three resources are being combined and used.

            The ultimate objective of every firm must be to satisfy the needs of its customers. People generally do not buy goods and services simply to own them but they buy a product to satisfy particular needs. Some of us may feel that the need for transportation is the best satisfied by an air-conditioned BMW with stereo compact disc player, automatic transmission, power seats and windows and remote-control side mirrors. Next, a business receives money (sales revenue) from its customer in exchange for goods or services. It must payout money to cover the expenses involved in doing business. If the firm’s sales revenues are greater than its expenses, it has earned a profit. A negative profit, which results when a firm’s expenses are greater than its sales revenue, is called a loss. A business cannot continue to operate at a loss for an indefinite period time.

            Many people dream of opening a business, and one of the first decision they must make is what form of ownership to choose. The three common forms of business ownership : sole proprietorship, partnerships and corporations[2]. Sole proprietorship is a business that owned by one person. Although a few sole proprietorship is the simplest form of business ownership and easiest to start. In most instances, the owner simply decides that he or she is in business. Sole proprietorship are most common in retailing, services, and agriculture. Thus, the clothing boutique, corner grocery, television – repair shop down the street, and small, independent farmers are likely to be sole proprietorship. Next, partnership is as a voluntary association of two or more persons to act as co-owners of a business for profit. Note, however, that this form of ownership is much less common than the sole proprietorship or the corporation.

In today’s competitive environment, it’s common to hear of large companies that are profitable. It less common to hear of profitable companies that are held in high regard because they are good corporate citizens. While not all sole proprietorship and partnership become corporations, there are reasons why business owners choose the corporate form of ownership. Corporation is an artificial person created by law with most of the legal rights of a real person, including the right to start and operate a business, to buy or sell property, to borrow money, to sue or be sued, and to enter into binding contracts[3]. Most of the advantage of from this three form of business : sole proprietorship, partnership and corporation.

            For sole proprietorship arise from the two main characteristics of this form of ownership : simplicity and individual control. Ease of start up and closure. Sole proprietorship is the simplest and the cheapest way to start a business. Often, start up requires no contracts, agreements, or other legal document. Thus, a sole proprietorship can be, and often is, established without the services of an attorney. The legal requirements often are limited to registering the name of the business and obtaining any necessary licenses or permits. If the enterprise does not succeed, the firm can be closed as easily as it was opened.

            A successful sole proprietorship is often very proud of her or his deal of credit for assuming the risks and solving the day-to-day problems associated with operating sole proprietorship. Unfortunately, the reverse is also true. When the business fails, it is often the sole proprietorship who is to blame. Because all profit become the personal earnings of the owner, the owner has a strong incentive to succeed. This direct financial reward attracts many entrepreneurs to the sole proprietorship form of business and, if the business succeed is a source of great satisfaction. 

            Next, partnership also have many advantages. Partnership are relatively easy to form. As with a sole proprietorship, the legal requirements often are limited to registering the name of the business and obtaining any necessary licenses or permits. It may not even be necessary to prepare written articles of partnership, although doing so generally a good idea. Partnership also availability of capital and credit because partners can pool their funds, a partnership usually has more capital available than a sole proprietorship does. This additional capital, coupled with general partners’ unlimited liability, can form the basis for a better credit rating. Bank and suppliers may be more willing to extend credit or approve larger loans to such a partnership can borrow all the money they need. Many partnership have found it hard to get long-term financing simply because lenders worry about the possibility of management disagreements and lack of continuity.

Next, personal interest. General partners are very concerned with the operation of the firm, perhaps even more so than sole proprietors. After all, they are responsible for the action of all other general partners, as well for their own. The pride of ownership from solving the day-to-day problems of operating a business with the help of another person – is a strong motivating force and often makes all the people involved in the partnership work harder to become more successful.

            For corporations, one of the most attractive features of corporate ownership is limited liability. With few exception, each owner’s financial liability is limited to the amount of money he or she has paid for the corporation’s stock[4]. This feature arises from the fact that the corporation is itself a legal person, separate from its owners. If a corporation fails or is involved in a lawsuit and loses, creditors have a claim only on the corporation’s assets, not the owners’ personal assets. Because it overcomes the problem of unlimited liability connected with sole proprietorship and general partnership, limited liability is one of the chief reasons why entrepreneurs often choose the corporate form of organization.   

            The corporation also ease in term of raising in capital. Like sole proprietorship and partnerships, corporations can borrow from lending institution. However, they also can raise additional sums of money by selling stock. Individuals are more willing to invest in corporations than in others forms of business because of limited liability, and they can sell their stock easily for profit. Corporation also ease of transfer of ownership. Willing buyer are available for most stocks at the market price. Ownership is transferred when the sale is made, and practically no restrictions apply to the sale and purchases of stock issued by an open corporation.

Five qualities of successful businessman[5]. An unwavering passion. The advice to do what you love has become a bit of a cliché. Everyone says, "Find your passion." But that's easier said than done. Being an entrepreneur demands commitment and dedication -- more than most jobs do, I'd argue. If you're ambivalent or mildly enthused about the product or service, that's not going to sustain you through the highs and lows that will inevitably occur. If you find something you love enough to want to share it with others, that love will fuel and give you purpose. Next, open-mindedness. The most successful entrepreneurs I know never forget how much they can learn from others. They ask for advice. They're flexible. They soak up the best practices around them like a sponge. Fear of failure can make it easy to grip onto your vision with an iron fist, but rigidity won't serve you.

The desire to be an expert.  Entrepreneurs like a challenge. If they didn't, they'd probably have chosen another line of work. But as exciting as it is to consider a new field, high-achieving entrepreneurs know the benefits of staying in the same industry for a while are immense. When you spend years in the same industry, you learn its history. Knowing what's been done before can help you identify how it can and should move forward. In the meantime, you'll build a network of relationships to support you in future endeavors, especially when times are lean. Those relationships are invaluable. In other hand, a forward-looking approach. Successful entrepreneurs are always thinking ahead. They may stray from their roadmap, and that's okay, but they have one in mind. Having a clearly established set of goals will keep you from getting stuck. Your goals may be constantly evolving, but if you don't know where you want to go, chances are, you won't get anywhere.

A constant flow of ideas.  Having one project that's doing well is great. But the successful entrepreneurs I know don't rest on their laurels. Instead, they're constantly asking themselves, "What's next?" They understand that being a successful entrepreneur is a lifestyle choice, not a destination.

Islam encourages trade because trade is the way to generate revenue. It is true because even today’s economies depend totally on businesses. If there is no business, there will be no money circulation at all, and people will die in no time because a huge number of people will run short of money and humanity will die followed by humans. We can see this happening in those parts of the world where people are poor and they do not have no opportunity to work and to earn. Therefore trade is the lifeline of the world to go on with its economic affair.

Business and trade in Islam are very different from what we see in the world today. First of all, there is not interest or usury on money supported by Islam, it is rather discouraged and a sin. Second thing is that Islam does not excluded or erases the morals and values even from the business unlike the today’s business where a new concept of “CSR” has been introduced to protect consumers and costumers considering them a “social responsibility” of businesses

            If we study the Islamic system of trade, first thing will be to work honestly, which is only dream in the business activities of the industrial oriented world today. If there is no honesty in business, it is rejected by Islam and such people are termed as liars, hypocrites and dishonest people and doing business with them only means loss. Secondly, unlike the annual reports based on false information about business and trade today, Islam says to legalize every important commercial transaction and to record it as a contract between two parties. Now when two parties sign a contract, they come to the common terms of agreement on the paper which becomes record. To renew the contract means to sign another contract with the new conditions which will become a new contract hence a business report will be prepared alongside the daily routine tasks. This excludes any chances of creationism obey applying lengthy, complex and unknown accounting principles. Allah (swt) says in Holy Quran:

“But those whose desires exceed those limits are transgressors”(23;7)[6]

“Those who faithfully observe their Trusts and their covenants; And who (strictly) guard their prayers. Those will be the heirs. Who will inherit Paradise: they will dwell therein (forever).(23;8-11)” [7]

Islam gives complete freedom to economic enterprise. Each individual in an Islamic society enjoys complete freedom in the earning of his livelihood. He can start, manage and organize any kind of business enterprise within the limits set by the Islamic Shari‘ah. However, freedom does not and must not operate without a sense of responsibility. An individual is free to pursue his economic activities provided he respects the code of conduct prescribed for the profession, which broadly means choosing things lawful and shunning matters unlawful. The dictates of the Holy Qur’an and the teachings of the Prophet (s.a.w) serve to set a scale in everybody’s mind to distinguish between the lawful and the unlawful means of earning, and to prohibit or disapprove of all things that are either morally wrong or socially unacceptable.

Islam, as a matter of principle, prohibits all activities which may cause harm either to the traders or the consumers in the market. It encourages the prevalence of free market where everyone earns his sustenance without government intervention.

However, it puts certain restraints in order to eliminate the incidence of injustice and check malpractices and unlawful operations. In all other respects market in Islam is free from any state intervention. However, if the people fail to take guidance from the Holy Qur’an in matters relating to business transactions, an Islamic state will strive to organize the market transactions on sound Islamic principles. Freedom of enterprise in an Islamic market will, therefore, be regulated by the (i) dictates of the Holy Qur’an and the teachings of the Prophet Muhammad (s.a.w) and (ii) the directives of the temporal authority. During the early centuries of Islam, this function was mainly performed by the institution of Muhasbah (headed by a Muhtasib or market inspector). The institution of Muhasbah was an important institution whose functions were broad-based and multifarious, chief among them being keeping a watch on the harmful practices prevalent in the market and the society and checking the incidence of injustice and malpractices in the market[8].

In conclusion, Starting a small business is complex, time-consuming and life-altering. There are many more things that go into running it than just providing the product(s) or service(s) that your business offers, however. You'll also be responsible for your business's finances, protecting your business and personal assets, keeping your business legal, paying taxes. 
            If you understand what you're doing and know how to minimize the risks and challenges, the independence, personal satisfaction and financial rewards you can achieve as an entrepreneur can make starting a small business the best decision you'll ever make. Make your dream a reality. Starting and running and running a successful business can be rewarding and challenging. Success requires focus, discipline and perseverance. However, success will not come over night - it requires a long-term focus and that you remain consistent in challenging environments[9]. 

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[1] Pride, Introduction to business, South –Western Cengage Learning, 10, 2010

[2] Pride, , Introduction to business, South –Western Cengage Learning, 107, 2010

[3] Pride, Introduction to business, South –Western Cengage Learning, 114, 2010

[4] Pride, Introduction to business, South –Western Cengage Learning, 118, 2010

[5] Girard, Starting a Business, Learn What You Need, Nova Vista Publishing, 50, 2012

[6] Surah Al-Mukminun : 7, Mushaf al- Masar, Masar Enterprise, 342

[7] Surah Al-Mukminun : 8 - 11, Mushaf al- Masar, Masar Enterprise, 342

[8] The Prophetic Traditions, Hadith Encyclopaedia Version 2.1 of Harf Information Technology.

[9] Smith, 10 Secret of Entrepreneurs, Piatkus Books, 47,2012