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.
Clarifications on Social Business:
I am not opposed to making profit.
Even social businesses are allowed to make profit with the condition
that profit stays with the company; the owners will not take profit
beyond the amount equivalent to investment. Social business is a new
category of business. It does not stipulate the end of the existing type
of profit-making business. It widens the market by giving a new option
to consumers. It does not intend to monopolise the market and take the
existing option away. It adds to the competition. It brings a new
dimension to the business world, and a new feeling of social awareness
among the business community.
When we approach the concept of social
business from the philanthropy side, it looks very convincing and
logical. Why should everything in philanthropy be given away? If some of
these goals can be achieved more efficiently and sustainably in a
(social) business format, then why not take that route? After all our
purpose is to achieve the social goal.
But when you approach it from the
orthodox business side, it tends to look a bit out of tune. Why on earth
give up profit? Why should anyone run a business without profit? I
understand the surprise perfectly.
Let me clarify: I am not asking any
businessperson to give up any of their businesses. Nor am I asking them
to convert some of their businesses into social business. The idea of
"giving up" something creates this shock wave. I am not asking anybody
to "give up" anything. All I am saying, if you are worrying about a
social problem (while totally engaged in your routine business) I have a
message for you, you can make a significant contribution in resolving
the problem. If you put your mind seriously into it, you may even open
the door to eliminate the problem globally. You can do both:
conventional business and social business.
It is all upto you to decide whether
you want to do a such thing or not. Nobody will raise an accusing finger
at you if you do no such thing. But you may feel happy if you do it. I
am suggesting a way which may make you a happier person.
