1.1.1—Business activity

Business activity organises land, labour, capital and enterprise to produce goods or services that meet a need. Adding value means the output is worth more to the customer than the inputs used.

Profit can reward risk, but the immediate test is whether the activity creates something customers choose. Goods are tangible; services are intangible and usually consumed as they are delivered.

A bakery combines premises, staff, ovens and entrepreneurial decisions to turn flour and labour into bread. A recipe change that improves convenience can add value without changing the basic product.

Adding value is not the same as making a large profit: costs, price, competition and demand still determine the outcome.