What is a Social business?

A social business is a company that is between non-profit and for profit. That is a simple explanation of what a social business is.

Now you know.

Do you remember when you were a young idealist, and you figured out world peace?

When I was a young teenager dreaming of a peaceful world, when I first understood how the world economy worked, I thought that companies should give 20 percent of their profits back to society. It was just a number to play with. I am not a macroeconomic expert. Now I think it should be 50%. Maybe it should be 80%.

The truth is we need to shift our profiteering ways and to apply sharing concepts in our system to counter a number of societal issues such as over-consumption and over-production which have led to pollution and exploitation.

First, part of the reason to apply the social business model is that the planet’s resources are collectively owned. Any company that depletes resource are responsible for that impact on everyone.

Second, if the world is in harmony,  perhaps a profit-oriented business model makes sense. But if it is not, then a good business model makes sense. A good business takes care of people and the planet first then profits last. Or profits just enough and the rest is placed back for the good of people.

This concept is named social business. It should not be confused with a social media business. 

Muhammad Yunus formalized the concept of Social Business beautifully. And for this, he won the Nobel Peace Prize along with Grameen Bank founded by Hans Reitz. Here is how they defined in this long definition of what a social business is:

“A social business is a non-dividend business whose aim is to solve a social problem through business methods. It is different from both a traditional personal profit-making business and a not-for-profit organization.

All profits from operation of the business must go toward achieving one or more social objectives in addition to covering costs of the company. No personal gain is desired by its investors. A social business can address problems such as providing healthcare, housing, and financial services for the poor, nutrition for malnourished children, providing safe drinking water, introducing renewable energy and much more in a business way.

Seven principles of social business:

  1. Business objective will be to overcome poverty, or one or more problems (such as education, health, technology access, and environment) which threaten people and society; not profit maximization.
  2. Financial and economic sustainability
  3. Investors get back their investment amount only. No dividend is given beyond investment money
  4. When investment amount is paid back, company profit stays with the company for expansion and improvement
  5. Gender sensitive and environmentally conscious
  6. Workforce gets market wage with better working conditions
  7. do it with joy”


Numerous companies have adopted the #SocialBusiness model because it makes good sense. It can be applied to brick and mortar businesses, to giant tech companies, to institutions, to entrepreneurial or artistic activities.






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