We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.

What are Secondary Activities?

Mary McMahon
By
Updated May 16, 2024
Our promise to you
SmartCapitalMind is dedicated to creating trustworthy, high-quality content that always prioritizes transparency, integrity, and inclusivity above all else. Our ensure that our content creation and review process includes rigorous fact-checking, evidence-based, and continual updates to ensure accuracy and reliability.

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

Editorial Standards

At SmartCapitalMind, we are committed to creating content that you can trust. Our editorial process is designed to ensure that every piece of content we publish is accurate, reliable, and informative.

Our team of experienced writers and editors follows a strict set of guidelines to ensure the highest quality content. We conduct thorough research, fact-check all information, and rely on credible sources to back up our claims. Our content is reviewed by subject-matter experts to ensure accuracy and clarity.

We believe in transparency and maintain editorial independence from our advertisers. Our team does not receive direct compensation from advertisers, allowing us to create unbiased content that prioritizes your interests.

Secondary activities are any activities a business conducts that are not part of its core business strategy and mission. In a simple example, renting out unused factory space is a secondary activity for a manufacturer, as the company's primary activities involve manufacturing and production, not real estate leasing. These activities support the primary goals of the business and make it more efficient by helping to cut costs, streamline use of business property, and maintain a positive image.

The nature of secondary activities can vary widely, depending on the industry. No primary activities are dependent on these business processes; in the example above, the company's manufacturing does not rely on renting out unused space. The secondary activity in this example increases efficiency by profiting from property that would otherwise be left vacant. This lowers operating expenses and creates another revenue stream for the company, offering a new benefit.

Selling off old assets, handling litigation in court, and administering financing agreements can all be examples of secondary activities. They do not directly pertain to the primary purpose of the business and may be peripheral to its goals. The business does not depend on these for income and they are not part of the normal scope of business practice. Businesses may be reluctant to dedicate personnel to managing these activities, instead choosing to contract them out to other companies. This can keep costs low and prevents the creation of an unnecessary department.

Businesses must account for secondary activities on financial filings like taxes and annual reports. These documents should include a detailed breakdown of income and expenses from these activities. Accountants can help businesses make decisions about the kinds of activities to pursue on the basis of their financial impact; for example, selling off vacant buildings may have a net loss to the business, while renting them could provide a revenue stream and maintain assets on the books for the purpose of depreciation and other tax benefits.

These activities may appear in a separate section on financial statements for shareholders and interested members of the public. They can provide interesting insight into a company's financial position; for example, if multiple lawsuits were settled in a single year, the company's coffers could take a hit, and it may be less capable of mustering capital for operations in the coming year. Conversely, companies bringing in revenue from vacant properties and other secondary activities may be in a stronger financial position.

SmartCapitalMind is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Mary McMahon
By Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a SmartCapitalMind researcher and writer. Mary has a liberal arts degree from Goddard College and spends her free time reading, cooking, and exploring the great outdoors.

Discussion Comments
Mary McMahon
Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a...

Learn more
SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.

SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.