What is a Social Business?

March 20, 2011 | By | 3 Replies More

 

Muhammad Yunus, Nobel Laureate and founder of Grameen Bank

Poor people do not create poverty. It is the system that creates poor people. So far, there is only one concept of business in the world, says Muhammad Yunus. Business is to make money. Profit maximising is the mission of business.

Muhammad Yunus, founder of Grameen Bank and Nobel Peace Prize winner in 2006 has proposed another kind of business: a Social Business. It is a business to do good to people, to do good to the planet, and without the intention of gaining any financial benefit out of it.

And to demonstrate this concept, he has created several successful businesses based on this model. It can be done, and it has been done. To find out more about each of them, click on the names below:

The Grameen Danone Company was created to help malnourished children in Bangladesh and in the process also helped beggars get out of begging.

The Grameen Shakti Company provides solar lighting to villages who are not connected to the grid and helped employ women in those villages to assemble and install them.

Social Business, according to Muhammad Yunus, is based on seven principles:

Original document developed by Muhammad Yunus at the World Economic Forum in Davos, January 2009

  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. Environmentally conscious.
  6. Workforce gets market wage with better working conditions.
  7. …do it with joy.

Social Business is not meant to be a replacement for the profit maximising business. It is an alternative – for those who want to do good for others. People who work there will not need to sacrifice their living standards to work there, but they should not expect exhorbitant salaries. Just like the investors, everyone in a Social Business is there because they want to help others, do it sustainably, and not focused on personal gain. All profits, after the initial investment is returned to the investors, are reinvested for expansion and doing more good.

You too, can create a Social Business. All it needs is an entrepreneur and the right business idea with the goal to help others. (read more about Tips for Entrepreneurs).

If you have Social Business ideas or comments you want to share, post a comment below.

Alternatively, you can join us at Facebook.

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Category: Ideas, Social Responsibility

ET

About the Author ()

EngTong, pioneer and innovator. Graduated from Imperial College London with an MBA from Cranfield School of Management. Lived in Scotland, England, California, Beijing and led teams in Italy, France, Japan, Taiwan and Malaysia to do the impossible. Now based in Singapore and believes the future is to blend the sophistication of western management practices with the strength of Asian Values. Trained as a Chartered Engineer. Member of IET, Associate of City and Guilds and a certified SixSigma Champion.

Comments (3)

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  1. santi says:

    can i start doing small action, using my own saving first, to see if it works and then build up and eventually find other investors? thanks.

    santi

    • ET ET says:

      Santi,
      Absolutely! Start small, like a businessman. Of course, make a profit to be sustainable. But unlike a normal business, don’t focus on profit maximising. When you are successful, there will be others who will want to join you (invest) because it is better than a charity – the money goes round multiple times, instead of just being used once. Do write back and tell us how you did. Good luck!

  2. You can certainly see your expertise within the article you write.

    The world hopes for more passionate writers like you
    who aren’t afraid to say how they believe. At all times follow your heart.

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