According to economists the first and the most important reason of each individual who starts his/her own business is to maximize profit. Therefore, the right answer would (d) Maximizing Profit. In order to be successful in any type of business, there are two kinds of costs involved. One kind is” Ends” Cost and the other one are” Means” Cost.
“Means” Cost is when a person’s resources are used up in the process of production. Therefore, it is measured when product is produced and sold. This “means” cost may be in the form of raw materials, labour cost, and other overhead cost. It is also the cost of making a product from start to finish.
On the other hand” Ends” Cost refers to the money that is obtained at the end of the process i.e., the cashier’s check that the person receives at the end of sales. The cashier’s check is money that the business owner has produced for his use. The money has been expended so as to make the goods produced and then sold to the customer. So, the “Ends” cost of a business process represents all costs of production which have not been consumed.
A person who starts her own business can either use the money produced to purchase goods and materials which she will use to start the business or to pay wages and salaries to employees. Once money is produced by the person to start a business, she will be adding to her capital i.e., her net worth. In this case, her net worth will increase with the success of her business. If she successfully runs the business for five years, then she will have saved her capital and her net worth will have appreciated.
In this stage, a person who starts her own business can either keep control of her business or give it over to a person who will take control of her business. A person who gives control of her business to another person can do so in two ways. Either she can hire employees to work for her on a full-time basis. In this way, a person who starts her own business can keep control of her business and also benefit from the profits that the business generates.
Alternatively, the person who starts her own business can sell the assets of her business i.e., the buildings and land can be used to build another business establishment. In this way, the person who starts her own business can generate new revenue for herself. But, in both cases, the person who starts her own business will have to make investments which will help her start a new business. The person who sells the buildings and land can either use these assets for the new business or sell them for a profit which is higher than the value of what she has invested in them. This profit made by a person on the sale of assets can help her to continue with her business without having to worry about any long term investments.