Business Vs Profession Vs Employment
The terms Business, Profession and Employment are three types of economic activity. One can differentiate these activities on the basis of qualification required, return obtained, mode of commencement, kind of work, etc.
Table of Contents
What is Business?
The word ‘business’ refers to a systematic economic activity that involves the exchange of goods and services in return for money. Economic activity is related to the purchase, production, supply and sale of merchandise to earn a profit. It can be an enterprise involved in commercial or industrial activities.
What is Profession?
Profession implies a certified and paid occupation carried out by any person, usually after undergoing prolonged training and a prescribed qualification. It requires specialized knowledge in the concerned domain. The professionals provide services to their clients for a certain fee.
Examples: Doctors, Lawyers, Auditors, Architects, and Engineers come under the category of professionals. This is because the students pursue a specific degree when they choose their respective profession.
What is Employment
Employment is when one person (employer) hires another (employee) to perform work or provide services as per the terms of the contract. The contract is signed between the two parties for an agreed remuneration, i.e. salary or wages. In simple words, in employment, the employee works for the employer, which can be a company, partnership firm, cooperative society, non-profit organization, etc.
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Difference Between Business, Profession and Employment
Take a read of the points to get the difference between business, profession and employment:
To commence a business, a person needs to invest some money in the form of capital and complete the legal formalities. But, the profession requires membership of the concerned professional body, plus a Certificate of Practice (COP). However, in the case of employment, the employer issues an appointment/joining letter to the selected candidate. The employer and employee sign the employment agreement.
Business is all about offering goods and services to provide value to customers. However, in a profession, professionals render specialized and personalized services to the client. As against, in employment, the employee works as per the terms and rules of the contract.
When it comes to qualification, there is no minimum qualification to start a business, but the profession requires a person to acquire the requisite professional degree and training in the concerned discipline. Lastly, in the case of employment, the qualification of an employee depends upon the nature of the job.
Test of Efficiency
The test of the efficiency of the business depends on the profit earned and customer satisfaction, whereas in the case of professional quality of services provided is the test of efficiency. Lastly, the test of efficiency is based on the dedication, loyalty and commitment of an employee towards his/her job.
Return or Reward
While a businessman earns profit out of his business, but may also incur a loss. A professional fee is a return for the profession that an expert or professional undertakes. Conversely, an employee earns a monthly salary for the services rendered to the employer under the employment agreement.
The capital investment required to start a business simply depends on the size, type and nature. But, one can start providing professional services with limited capital investment. In contrast, employees need not make any capital investment.
We all know that risk is inherent in the business. This is because business income is uncertain and changes frequently. There are instances when companies earn profits, but they also suffer losses many times, and this is due to many factors like change in market conditions, government rules, taxes, change in consumer preferences, competition, etc.
Though the income is fixed and regular as well, some amount of risk may be involved in the profession. On the contrary, employment does not involve any kind of risk, as there is fixed and consistent pay.
Code of Conduct
In business, no code of conduct is prescribed as such. Conversely, in the case of the profession, a professional code of conduct is prescribed, which must be followed by all professionals. However, in employment, the employer lays down the behaviour norms which are to be followed by the employees.
The basic motive for doing business is earning profits by providing value to the customers. Whereas in the profession, delivering professional and advisory services to the client when required acts as a motivation. Lastly, the motive for the employer is the attainment of objectives, for an employee, it is the wages or salary earned.
The businessman makes optimum use of the business resources to earn maximum profit, as well as to survive the competition. On the other hand, the professional invests his time, money and efforts to obtain specialized knowledge and provide expert services to the clients. Whereas, in employment, employees are the human resources who contribute their labour and expertise to serve the employer.
Businesses often put their ads on different media platforms to reach the maximum number of customers. Also, it promotes the products and services offered by them. However, professionals are not permitted to advertise their services.
Contrastingly, in employment, employers usually place advertisements concerning the vacancies in the company, which consist of qualifications, work hours, pay and other eligibility criteria. It also helps in finding the right person for the job.
Quick Comparison: Business Vs Profession Vs Employment
|Commencement||Capital investment and compliance of legal formalities||Membership of the professional body and Certificate of Practice||Appointment letter, issued by the employer to the selected candidate.|
|Work||Provision of goods and service.||Rendering of professional and specialized services.||Working as per the terms and directions of the employer.|
|Eligibility||No specific qualification to start business.||Prescribed qualification for profession.||Qualification is job specific|
|Test of Efficiency||Profit earned and customer satisfaction.||Quality of services provided.||Dedication, commitment and loyalty of employee towards work|
|Capital Investment||Capital investment depends on the size and nature of business||Limited capital investment||No capital investment|
|Risk Involved||High Risk||Low Risk||No Risk|
|Code of Conduct||No Code of Conduct||Professional Code of Conduct||Behavioral norms prescribed by employer|
|Motivation||Earning profit and increasing the market share, acts as a motivation||Rendering expert service to the client acts as a motivation.||Attainment of objectives acts as a motivation for employer|
|Resources||Men, Material, Money and Machinery||Time, money and efforts of the profession to obtain the knowledge||Employees are the human resources, who contribute their labor and expertise.|
|Advertisement||Advertisement is made by businesses to get the maximum reach.||Advertisement is forbidden||Employer place advertisement to hire the best employees.|
|Examples||Firm, Shop, Factory, or Agency||Legal Profession, Medical Profession, Chartered Accountant, Tax Consultant, Engineer and Architects.||Job in a company, bank, store, etc.|
One can opt for any of the three economic activity which suits them better. However, factors like capital investment, the risk involved and earnings play an important role which needs to be considered for selection.