Sharifa Jamaldin A social business is a company with a social mission that is between non-profit and for-profit with a focus on societal good. That is a simple answer to what a social business is.
Now you know.
Do you remember when you were a young idealist, and you were figuring 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% of their profits back to society. It was incredible to me that a company could profit using up universal resources. It was just a number to play with. I was not a macroeconomic expert at the time. Now I think it should be 80%. Maybe it should be 70%.
The truth is we need to shift our profiteering ways and to apply sharing concepts into our system to counter a number of societal issues such as over-consumption and over-production which have led to pollution and exploitation or destruction of the environment.
Why is a social business good for everyone?
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 was peaceful and had endless resources harmony, perhaps a profit-oriented business model might work. But if it is not, then a social business is a wise business model. A good business takes care of people and the planet first then profit are calculated after that. Also, a minimal profits are 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.
Social Business is a noble peace Prize concept
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.
From Yunus Society website: “A social business is a company with a social mission at its core. Set up to solve a specific problem to the benefit of poor or disadvantaged members of society, social businesses operate exactly like normal companies except for a few small differences.Unlike a charity, a social businesses generates profit and aims to be financially self sustaining. Removing the need for fundraising allows social businesses to re-invest profits back into generating sustainable social impact. A social business creates income for disadvantaged populations or serves them as its primary customers. 100% of the company profits are reinvested in continuing the company’s social mission.”
On the Grameen Creative Lab website, seven guiding principles are outlined:
“Seven principles of social business:
- 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.
- Financial and economic sustainability
- Investors get back their investment amount only. No dividend is given beyond investment money
- When investment amount is paid back, company profit stays with the company for expansion and improvement
- Gender sensitive and environmentally conscious
- Workforce gets market wage with better working conditions
- do it with joy”
Numerous companies have adopted the #SocialBusiness model because it makes good sense. For instance, the tree building search engine ECOSIA. It can be applied to brick and mortar businesses, to giant tech companies, to institutions, to entrepreneurial or artistic activities. So let’s do it. Let’s make a better world now.