The purpose of business activity and enterprise

The purpose of business activity

Businesses carry out activities such as producing goods or providing services with the aim of selling them to customers and making a profit. As such, the purpose of business activity is to provide goods and services that customers want, at a price that they are willing to pay.


Goods are tangible items that can be used and stored. Businesses make goods and sell them to customers, who then own them. Examples include:

  • computers
  • food
  • clothes


Services are intangible actions that cannot be stored. Businesses provide services to customers, who have access to them for a period of time. Examples include:

  • hairdressing
  • train journeys
  • internet access

Spotting an opportunity

Jaap the carpenter discusses being self-employed and how he manages his business

Many businesses exist in order to meet a specific need or fill a certain gap in the market. To do this, they sell goods, services or both. An entrepreneur might start a business enterprise because there is a demand for the goods or services they can provide. This means that they have spotted an opportunity to meet the needs of customers in a way that is not currently being offered.

Developing an idea for a business

Businesses have to adapt and develop new ideas, products and services to keep up with technology and new trends. Business ideas can come about through the development of an original idea, or the adaptation of existing products and services.

Original Ideas

Thinking of a new product or a new idea can be challenging for anyone. Entrepreneurs need to be creative but also insightful about what customers want. For example, Trunki designed a unique suitcase product for children that many other companies are now trying to copy. Original ideas can be an invention or an innovation:

  • Invention means creating something that did not previously exist, eg self-tying shoelaces. Entrepreneurs are always trying to think of new products and services to launch, but it can be challenging to come up with a completely new and unique idea
  • Innovation is the successful commercialisation of an invention, or the adaptation of a product over time to improve its features. It involves changing existing processes or creating new, more effective processes, products and ideas. An example of an innovation would be the traditional light source of the candle, which has been replaced several times over the years, most recently with the ultra-efficient, low-energy LED bulb.


Adaptation is the process of changing an existing product or service so that it is suitable for different customers. This can often be seen as a less risky business option than launching a brand new product.

One form of adaptation is when a product is changed or altered to appeal to different customers. For example, a restaurant may change its menus and serve a wider range of foods as customers’ tastes change. One example of this is the move by some restaurants to offer a larger range of vegan dishes.

Satisfying the needs of customers

Businesses exist to provide what their customers need or want. A business is more likely to survive and make a profit if it provides customers with what they want, whether that is specific product features, low prices, fast delivery, an easy-to-use website or a pleasant shopping experience. Knowing what customers need and want is an important part of running a business.


Needs are things required in order to survive. These life-essential things include:

  • clothing
  • food
  • shelter
  • warmth
  • water
What people need in order to survive, clothing, food, shelter, warmth and water.


Wants are things that people would like to have but can survive without. Wants are unlimited, and might include:

  • event tickets
  • designer accessories
  • holidays
  • laptops and mobile phones
  • cars
Examples of the things that people might want, designer accessories - handbags and watches, events such as music festivals, holidays, technology and luxury cars.