Social Business (SB) is a business model for an entrepreneur to solve social,
financial and environmental problems in the society. Entrepreneur in the
field of social business are called social business entrepreneur (SBE).
A simple and pure social business follows
the principles set by Prof. Yunus Muhammad. Prof. Yunus has prepared a broad
set of guidelines for a social entrepreneur to understand and follow.
Based on the guidelines, social business entrepreneur can identify a new
business opportunity or qualify existing business as social business
(SB).
Core guiding principles
of social business:
- Business provide its services to the lowest income group,
solves social problem (healthcare, technology, communication,
education and environment) , and solves humanitarian needs.
- Business must be viable, feasible and economical sustainable in the
short term and long term
- Business generates profit to pay back the investor over period of
time, without interest , without cash dividend or any financial incentives.
Net amount received is the net amount paid back to the investor.
- Profit accumulated after payback to the investor remains within the
company for the purpose of funding growth and expansion activities.
- Business is sensitive & conscious to gender and environment
respectively
- Business creates jobs , offers respectable salary and good
social working condition
- Business brings happiness , delight and recognition for
all the stakeholders.
Social business has distinctive features
compared to profit maximizing company. In a
profit maximizing company, the biggest motive is to generate profit,
unlike in social business the profit motives are to the level of reaching
sustainability not beyond.
Further in a profit maximizing company
stakeholders receive profit share, unlike the social business model where there
is no sharing of dividend, being a pure and simple non-dividend business model.
Social business, unlike other non-profit business based on charity, don't
depend on charity, public or private donation to raise funds, as the business
model is self-sustainable to fund growth and expansion. Moreover, charity based
non-profit organization raise funds on regular basis, as fund is deployed in
the field once and for all. Unlike the charity based non-profit organization,
social business model deploys fund to rotate multiple times to generate enough
profit to sustain in short term and long term.
'Social business is a business created and designed to address a
social problem and non-dividend company, and solving the most pressing
needs of the society' - Prof. Muhammad Yunus
Social business creates positive impact on
the society and solves problems related social, financial & environmental
further covering industry specific needs like heath care, communication and
education.
The social business is a success from its
start as it offers qualitative impact on the society, unlike the
profit maximizing companies. Because of this positive impact,
investors with philanthropic approach find social business much more rewarding
than the classical profit maximizing business. Not only the wealth is
distributed in a social business, no dividend policy helps the company to grow
year on year without regular funding, thereby creating a much bigger social
impact.
In the context of free market economy, profit maximizing business and social
business compliments each other, as an investor can do both at the same
time without conflicting the business model.
Social Business offers a tremendous
learning experience opportunity for an entrepreneur. It offers day to day
challenge to an entrepreneur. It is extremely important for a social business
entrepreneur to enjoy the challenge and share the challenge with known
experts.
Social business model is gaining momentum
worldwide as alternative to capitalism. Capitalism has so far failed to remove
poverty, provide education to poor, unemployment and health care for all.
Government started taking initiative to
offer all the basic needs for the poor in terms of education, health care and
jobs. It is well known fact that government has also failed in its effort to
eradicate poverty, unemployment and healthcare for the poor.
Social business has proven to be a success
over the last few years where capitalism and government have failed over the
past couple of decades.
Source of fund for social business is
charity money from individuals who are high net worth individuals.
Another source of fund is Corporate Social
Responsibility (CSR) program of large corporate. These large corporate run CSR
with three objectives: Environment, social and financial benefits.
Research data has proved that the
individual charity money is more suited for SBM; as CSR program originates from
financial profit and financial profit remains the major objective for these
companies.
Social business is fundamentally a business model which is pure and simple. It
is different than social enterprise, which also solve social problem and at the
same time generates profit for investor. The future of social business is
bright as it gives the investor the motivation to achieve a social goal and
enjoy its success as satisfaction.
Grameem Danone is one of the best success
story in CSR based social business. It offers fortified sweet yogurt for
malnourished children of Bangladesh at affordable price, called "Shokti
Doi" meaning “Energy Yogurt”.
The future of social business is very
clear, it will take off and deliver a tough challenge to free market capitalism.
The success of SBM will attract the best business talents to explore and
experience the new form of capitalism.
The financial market, including the stock
market will respond to the new form of capitalism and form new index to measure
the financial, social and environment impact of Social Business. It will start
a revolution in the financial capital market and will motivate the world for
accept social business as financial viable business model in free market
economy.
Countries like USA, Bangladesh, India, Germany, Brazil and many African
countries have ongoing projects based on social business model. It is time for
the rest of the world to experience social business.
“The best way to experience an experience
is to experience it.” - William Grant
