What is Business?
A walk through Haldwani market
It's a Tuesday morning in Haldwani, and the Bhotia Parao market is waking up. Bhandari uncle is rolling up the shutters of his hardware shop. Two lanes down, a woman is setting up fresh vegetables on a wooden cart. Across the road, a man in a kurta is opening his cloth store, arranging fabric rolls by the door to catch the eye of people walking past. Somewhere, a phone repair guy is already hunched over a cracked screen.
None of these people went to business school. None of them have a pitch deck. Most of them don't even call themselves "entrepreneurs." But every single one of them is running a business.
If you've ever walked through a market — in Haldwani, Almora, Haridwar, or any town in India — you've seen hundreds of businesses operating right in front of you. Some have been running for three generations. Some started last month.
What are they all doing?
They're solving someone's problem, and getting paid for it.
That's it. That's business. Everything else — accounting, marketing, funding, legal — is just the machinery that keeps this simple exchange running smoothly.
The simplest definition
A business is any activity where you:
- Find a problem someone has (or a need, or a want)
- Offer a solution (a product or a service)
- Get paid for it
Bhandari uncle's customers need cement, pipes, and wiring for their houses. He stocks those things and sells them at a margin. Problem solved.
The vegetable seller's customers need fresh sabzi for dinner. She buys from the mandi at 4 AM and sells by the roadside by 7 AM. Problem solved.
The phone repair guy fixes cracked screens. Problem solved.
If no one has a problem, you have no business. This sounds obvious, but you'd be surprised how many people start a business around what they want to sell, rather than what someone else wants to buy.
Goods vs Services
Every business in that market is selling one of two things:
Goods — physical things you can touch, stock, and transport.
- Bhandari uncle's cement and pipes
- Rawat ji's apples
- Ankita's pahadi pickle jars
Services — work you do for someone, using your skill or time.
- The phone repair guy's expertise
- Neema and Jyoti's homestay hospitality
- A tailor stitching clothes to order
Some businesses sell both. A restaurant sells food (goods) and the experience of sitting, being served, and not having to cook (service). A cloud kitchen sells only the food.
Key idea: Goods can be stocked — you make them once and sell many times. Services are delivered in real-time — you're trading your time and skill. This difference affects everything: pricing, scaling, hiring, inventory.
The three numbers that matter most
Every business, from a street vendor to a multinational corporation, comes down to three numbers:
Revenue — the total money that comes in from selling your product or service. Also called "turnover" or "top line."
Cost — everything you spend to run the business. Raw materials, rent, salaries, electricity, transport, packaging, GST — all of it.
Profit — what's left after costs are subtracted from revenue. This is your reward for taking the risk.
Profit = Revenue - Cost
That's it. If revenue is more than cost, you're profitable. If cost is more than revenue, you're losing money. If they're equal, you're at break-even — surviving, but not earning.
Pushpa didi sells a cup of chai for ₹20. It costs her ₹8 to make (tea leaves, milk, sugar, gas). That ₹12 difference? That's her gross profit per cup. But she also pays ₹6,000 rent, ₹5,000 to her helper, and about ₹2,000 for random expenses every month. Those are her fixed costs. She needs to sell enough cups so that the ₹12-per-cup profit covers these ₹13,000 of monthly fixed costs.
₹13,000 ÷ ₹12 = about 1,084 cups per month. That's roughly 36 cups a day.
Below 36 cups: losing money. At 36: break-even. Above 36: profit.
Pushpa didi usually sells 80-100 cups a day. She's profitable. She just didn't know the word for it until now.
We'll go much deeper into these numbers in the Financial Literacy chapter. For now, just remember: Revenue, Cost, Profit. Every business decision you make affects one of these three.
Types of business
Look at our characters, and you'll see that "business" isn't one thing. It comes in many flavors:
Manufacturing
You make something. Raw materials go in, a finished product comes out.
Rawat ji doesn't just sell apples from his orchard — he's now thinking about making packaged apple juice. He'd need equipment, a processing unit, FSSAI license, packaging. That's manufacturing.
A person making candles at home, a factory producing steel rods, a unit stitching garments — all manufacturing. The core challenge: production efficiency and quality control.
Trading
You don't make anything — you buy and sell. The margin between your buying price and selling price is your profit.
Bhandari uncle is a trader. He buys cement from a distributor at one price and sells it to customers at a higher price. The vegetable vendor is a trader too.
The core challenge: managing inventory, credit, and relationships with suppliers and buyers.
Services
You sell your skill, time, or expertise. Nothing physical changes hands.
The phone repair guy, a lawyer, a CA, a tutor, a web designer, a plumber — all service businesses. Neema and Jyoti's homestay is a service business too (hospitality).
The core challenge: pricing your time fairly and delivering consistent quality.
Technology
You build a digital product or platform that solves a problem at scale.
Priya's agri-tech app connects farmers to direct buyers. She doesn't grow anything or sell anything herself — she built the platform. If it works, it can serve 100 farmers or 10,000 farmers with roughly the same infrastructure.
The core challenge: building the right product, finding users, and scaling.
Agriculture
You grow, raise, or harvest something from the land or water.
Farming, dairy, poultry, fisheries, horticulture — these are all agriculture businesses. In Uttarakhand, apple orchards, off-season vegetables, and medicinal herbs like tejpatta and jatamansi are major agri businesses.
The core challenge: weather, middlemen, post-harvest storage, and price volatility.
Food
Restaurants, dhabas, cloud kitchens, catering, packaged food, bakeries, tiffin services.
Ankita's packaged pahadi chutney is a food business. A dhaba on the Rishikesh highway is a food business. A bakery in Dehradun is a food business.
The core challenge: food costing, hygiene, shelf life, and very thin margins if you don't manage them carefully.
Franchise
You don't build the brand — you operate someone else's proven model in your area.
Vikram invested ₹18 lakh to open a franchise outlet in Dehradun. He got the brand name, the menu, the training, and the marketing support. In return, he pays a monthly royalty.
The core challenge: following someone else's system while making the unit economics work in your location.
Most businesses are a mix of these types. Rawat ji is in agriculture AND manufacturing (if he processes juice) AND trading (if he sells other farmers' produce too). Ankita is in food AND trading (she sells online). That's normal. The categories just help you understand what kind of problems you'll face.
Small business vs Startup
You'll hear these two words a lot. Let's be clear about what they mean — and more importantly, that both are completely valid.
| Small Business | Startup | |
|---|---|---|
| Goal | Build a profitable, sustainable business | Build a high-growth company, often aiming for massive scale |
| Funding | Self-funded, bank loans, government schemes | Angel investors, VCs, equity funding |
| Growth | Steady, organic, reinvest profits | Aggressive, often burning cash to grow fast |
| Risk | Moderate — you can start small | High — most startups fail |
| Examples | Pushpa didi's chai shop, Bhandari uncle's hardware store, Neema's homestay | Priya's agri-tech app, a SaaS platform, a marketplace |
| Exit plan | Run it for life, pass to children, sell it | IPO, acquisition, or shut down |
Neither is better. They're different games with different rules.
A chaiwala who runs a profitable shop for 20 years, supports a family, employs 3 people, and serves great chai? That's a success. A tech founder who raises ₹5 crore, builds a product, but shuts down after 3 years because it didn't find product-market fit? That might not be.
The trap to avoid: Don't feel pressured to become a "startup" if what you really want is a good, profitable business. And don't feel like a small business is somehow "less" because it's not chasing VC funding. The best business is the one that makes you a living, serves your customers well, and lets you sleep at night.
The media celebrates startups because their stories are dramatic — big raises, big failures, big exits. But the quiet, steady businesses that keep India's economy running? They deserve just as much respect.
The shopkeeper is an entrepreneur
Bhandari uncle has been running his hardware shop for 22 years. He manages inventory worth ₹15-20 lakh at any time, extends credit to contractors (and collects it — mostly), negotiates with multiple distributors, adjusts prices based on season and demand, manages two employees, handles GST compliance, and has survived three economic downturns including COVID.
He doesn't have a LinkedIn profile. He's never heard of "supply chain management" or "accounts receivable." But he practices both every single day.
He is, by every meaningful definition, an entrepreneur.
Don't let the fancy terminology of business schools make you feel like running a shop or a dhaba is somehow not "real" entrepreneurship. It absolutely is. The concepts in this book — accounting, pricing, cash flow, marketing, strategy — they apply to Bhandari uncle as much as they apply to a tech startup founder.
In fact, many small business owners are better at the fundamentals than startup founders, because they can't afford to lose money — there's no VC to bail them out. Every rupee matters. Every customer matters.
What's coming next
Now that we know what business is, we need to understand the world it operates in. Why do prices change? What does inflation do to your costs? Why do interest rates matter when you're thinking about a loan?
That's economics — and we'll learn only the parts that actually affect your business. No textbook theory. Just the stuff that shows up in your daily decisions.
In the next chapter, we visit Bhandari uncle's shop again. A bag of cement that cost ₹320 last year now costs ₹380. His customers are complaining. But his rent went up too. And the bank just raised the interest rate on his loan. What's going on?