Difference Between Business and Finance
Business vs Finance
Every businessman knows that aside from doing a lot of math, one has to understand business terms in order to make money, especially in the present economic crises in the United States and the United Kingdom. It boils down to the basics when it comes to scoring high in the business world. Sadly, most businessmen are too engrossed in computing gains and losses to pay attention to significant terms which can help them manage their business better, and attract more customers.
There are four business terms each businessman should know by heart: marketing, economics, finance, and business. Knowing the definition of each of these terms would not only help businessmen during media interviews and seminars, but also help in knowing how to handle their business more effectively. Some businessmen may argue that knowing these terms are not required in order to attain success. However, these terms can be compared to the support pillars of a building. The building can stand tall without the support pillars, but having these pillars nevertheless gives an assurance that the building won’t fall to the ground easily.
The first two terms, marketing and economics, are usually discussed by economists, stock brokers, and analysts. When one discusses marketing, the terms consumers, supply and demand would always come into play. Marketing attempts to explain in an objective way the trends which dictate the demand of consumers and supply of products. On the other hand, economics studies the factors which lead to distribution, production, and consumption of services and goods of a particular economy.
With all these formal-sounding terms, one would think that getting an MBA is necessary in order to understand the inner workings of business and finance. However, a simple differentiation of these two terms would greatly aid businessmen who have been using these two terms interchangeably. Confusing these two terms may not only mislead businessmen into making small mistakes, but also change others’ perception of the businessman if he or she is not able to define either term in a formal gathering.
Finance deals with two factors: money and time. It is concerned with the study of how individuals and institutions earn, save, and spend money over a certain length of time. Finance is present in studies which describe how people save up for future expenses, or how people spend money while they’re in the mall or supermarket. On the other hand, business is concerned with legalities. The main aim of business is to create a legally-supported organization which operates by selling goods and/or services. This organization is bound to a country with a free economy, one which does not impose undue tax or tariffs. In order to start a business, one should ideally have connections with a legal firm in order to gain legal foundation. Having a legal foundation means that the business is legitimate, that it has a working permit issued by the government, and that its products are approved by either the food and beverage safety board or the department of trade and industry of the country it operates in.
1. There are four terms each businessman should know: marketing, economics, business, and finance.
2. Marketing attempts to explain trends in supply and demand.
3. Economics pertains to factors which lead to distribution, production, and consumption of services and goods in a certain economy.
4. Finance is the study of how individuals and institutions earn, save, and spend money over a certain length of time.
5. Business is concerned with legalities. The main aim of business is to create a legally-supported organization which operates by selling goods and/or services.
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