Social Business is a newly born idea pioneered by Muhammad Yunus, Nobel Peace Laureate who argues that Capitalism is a half-done theory and Social Business is the missing part of Capitalism.
Basic Concept: Social business is a cause-driven business. In a social business, the investors/owners can gradually recoup the money invested, but cannot take any dividend beyond that point. Purpose of the investment is purely to achieve one or more social objectives through the operation of the company; no personal gain is desired by the investors. The company must cover all costs and make profit, at the same time achieve the social objective, such as, healthcare for the poor, housing for the poor, financial services for the poor, nutrition for malnourished children, providing safe drinking water, introducing renewable energy, etc. in a business way.
The impact of the business on people or environment, rather the amount of profit made in a given period measures the success of social business. Sustainability of the company indicates that it is running as a business. The objective of the company is to achieve social goal/s.
Types of Social Businesses: There are two types of Social Business that the father of its is advocating for. Type I: Focuses on businesses dealing with social objectives only. E.g.: The product produced is for the benefit of the poor.Type II: Can take up any profitable business so long as it is owned by the poor and the disadvantaged, who can gain through receiving direct dividends or by some indirect benefits.E.g.: The product could be produced by the poor but exported to an international market while net profits would go towards workers benefits.
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 dividen is given beyond investment money
4. When investment amount is paid pack, company profit stays with the company for expansion and improvement
5. Environmentally Conscious
6. Workforce get market wages with better working conditions
7. … Do it with joy
