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Understanding How Business Works: A Practical Guide for Entrepreneurs

The historical significance of business and commerce, like everything great, started from humble beginnings. A person has chickens, while another has apples. A person can swap goods for another. That is the concept of barter and trade. Then quantity is of the element; one chicken is to two apples or one apple is to two chickens, depending upon the agreement between the two parties. To solve this dilemma, a mutual currency is necessary, hence money. If you bring currency into the equation, one silver coin is equivalent to one chicken or two apples.

The business has evolved into a progressive discipline with complex concepts and rules. However, the essence that is satisfied is the profound simplicity of supply and demand.

Here’s why aspiring entrepreneurs should learn the core business concepts before jumping into a venture:

It’s Inescapable

Almost all aspects of life involve business, and everything has a price tag: the water, faucet, pipes, sink, and electricity. Living a life free of business is not impossible, but living life means wanting or needing something. You can escape business talks, but you can’t live without the elements that involve business. You will want something from someone else who has it, which is a definite inescapable truth.


It is safe to say that people, as a whole, have moved further away from the clutches of hunting and gathering to be able to survive. The modern world lifted the idea of hunting and gathering to its highest potential, gathering resources and hunting for potential markets.

Understanding the basics of how business is properly conducted will significantly increase one’s rate of self-sufficiency. With the help of the basic idea of ‘savings,’ sufficiency may be passed on to your lineage.

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National Economy

The father of modern economics, Adam Smith, insists that competition within private individuals will sip out the best out of them. The best products resulting from this free trade will eventually give abundance to the national economy itself.

Opening up markets for trade will allow a healthy financial flow, and citizen satisfaction will be met. Though advanced and include global significance, such concepts require an individual’s participation in his local capacity.


Having resources, which is the primordial factor or requirement of every business, may supply a demand within the vicinity of a business and to foreign countries that need such resources. Thus, a relationship between countries engaged in trade and commerce is an inevitable positive consequence.

Such a relationship would result in a partnership that would have far-reaching impacts on a country’s economic growth and foreign relations, that would eventually strengthen policies and tax tariff walls, or opening up opportunities for the people and the country as a whole.


Though traditionally most business establishments have leaned towards the importance of profit and earnings, the heart of every business, which is to provide what is needed, will always be an indispensable element.

However, every business endeavor’s advantageous outcome or result is a tangible value represented best by profiting from the goods, services, or products offered. Profit will enhance one’s way of living as an individual and everyone involved, may it be government, employees, or direct family.


Not everyone has the privilege or can afford to have a business. This dynamic is necessary for every business. Some people would prefer to work in which way they can have profit too. Having a healthy idea of how business works and having one for yourself would greatly help those in need of employment.

Providing reasonable compensation so that your employees can sustain their individual or collective daily needs is a unique form of sharing profit with others.

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Natural Resources

Understanding the concept of business would be equivalent to seeing the potential of anything around you. The environment, for example, is a resource that would be an untapped potential if people are not armed with the proper education or understanding of how business works.

Even the ordinary tree leaves that wither away may be used as a utility for other avenues and potentials like medicine, paper, fire, or others that may best be used for such a commonly overlooked natural resource.


Some advancements in technology are due to the essential need of some businesses. Robotics is one of the most enjoyable technological creations, perfectly designed to aid business people who aim to enhance the quality of their products, decrease their expenses, and speed up production.

Amazon is one of the companies that benefited most from the rise of robotic technology—replacing employees that are bound to have human limitations and can be costly. Innovation within the business world is also effective for advancing commercial trade and the advancement of the human condition itself.


One of the fundamentals in business is the idea of supply and demand. It is essential to study the importance of such, for it can be most tricky even to know if demand will persist or eventually die down.

Diving into the business world ill-equipped is tantamount to financial self-destruction. Having premature ideas consequently affects the potency or effectiveness of a business endeavor. A demand may only be superficial and temporary, and it will be unwise to spend capital on a short-term product.

Self Development

One of the best reasons why you should learn how business works would be that of self-improvement. Even if you’re not planning to venture into the world of business, you are already participating in it on a daily basis. It is an edge to be informed and educated on the ebbs and flows of a business paradigm, and this is so to avoid any trickery that is not common in a profiteering line of work. For example, you cannot make ends meet, and your revenue is not growing. To weather this tough time, you can file for Chapter 7 bankruptcy. There are good days and bad days in business, and those bad days will shape you and develop your business skills.

Knowledge is always an advantage in a careless and frightening world. To avoid being a victim of those who will take advantage of such ignorance is a modern age achievement in itself. Business is engraved as an activity and part of society, and to be equipped with the knowledge needed to understand and maybe start a business is crucial.

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