Muhammad Yunus describes in a clear way what’s NOT a “social business”:
- if the investors desire a personal gain and take profit beyond the amount equavilent to investment, it’s not a social business.
- if the business relies on charity money, on bi- or multilateral donors or on Corporate Social Responsibility (CSR) activities of companies, it’s not a social business (see also “Defeat Poverty” article).
The seven principles of a social business are:
- Business objective will be to overcome poverty (BTW: interesting article on a new way to measure the poverty of countries), 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
- Environmentally conscious
- Workforce gets market wage with better working conditions
- …do it with joy
So, any examples of successful social businesses?
Yunus offers an example in the video above (Shakti Doi yoghurt production). The article in the Times magazine outlines one aspect which Yunus sees as an huge advantage for the Profit-Maximising-Entrepreneur who would like to engage in social business: to start a social business is connected with a learning process:
… You realise that you are now wearing “social business glasses” on your eyes, you see things which you never saw before. You start sensing that your eyes were fitted with “profit-maximizing glasses” all along, while you thought these were your natural eyes in your economic world. Now when you turn your eyes to your own profit-making businesses you start noticing things which you never noticed before. You bring new-gained experiences from your new business to your old businesses. … (Muhammad Yunus on Social Business)
