This essay outlines how business entities began and grew to become the recognizable ancestors of modern business. It suggests that deliberate innovation and marketing are the principal distinctions between modern and ancient business, and argues that finance, although important even in antiquity, has become vastly more so today because of techniques that greatly increase the trustworthiness of borrowers.
Irritated one day about a management error at my company, I said to myself “this place is run like a Roman blacksmith’s shop!” That stopped me, as I realized that I knew nothing of Roman blacksmith shops, or even if they had them (they did). From that moment I wanted to know how business began, what business was like in its early times, and how much it has changed.
Businesses are not just entities that trade or manufacture. Governments, charities, farmers, and others have also done these things; conversely, businesses have often done things, like tax collection, that we now expect of governments. What distinguishes a business from all other entities is that it sells to voluntary customers for a profit. Businesses must attract enough customers and earn enough profit to justify the risk, effort, and investment involved in operating them. These needs determine what, where, and how businesses sell, and require urgent attention to costs, revenues, investments, and markets.