How To Build A Social Business: The Complete Guide
Do you want to make the world a better place? One great way to do this is by building a social business.
But what exactly is a social business and how can you start your own? In Building Social Business, you’ll learn all about building and running a successful social business.
You’ll find out what sets it apart from other social enterprises like charities, nonprofits, and NGOs.
You’ll also get advice on how to come up with a concept for you own social business as well as tips on getting it off the ground.
Plus, you’ll read examples of successful Bangladeshi banks ran successfully by people living in poverty and why it’s important to aim for profits even when creating a social business – after all, capitalism isn’t complete without them!
What Is Social Business And How Does It Work?
Rather than just focusing on maximizing profits, there’s a different way to do business that makes it about solving society’s problems instead of just getting rich.
This type of business is called a social business.
At its core, a social business aims to address social issues like economic disparities or environmental problems.
It does this by producing a product or service that allows the venture to become self-sustaining and starts to generate profits.
The profits from these businesses can be used in two ways.
With Type I social businesses (like Grameen Danone), all profits are reinvested back into the company so that no one is making a gain or loss from them.
On the other hand, Type II social businesses (like Grameen Bank) channel all of their profits to low-income citizens directly which helps alleviate poverty among citizens.
So whether it’s helping to combat malnutrition or poverty, social businesses are unique in the sense that they focus on providing solutions rather than aiming solely for larger profits.
The Difference Between Social Businesses And Other Types Of Ventures: What You Need To Know Before Starting Your Own
A social business is a special type of venture that has a clear social mission and is economically sustainable, meaning it can generate income without losing profits or dividends.
This makes it distinct from other charitable and socially oriented organizations such as foundations, nonprofits, and NGOs.
Foundations are nonprofit organizations whose activities consist of distributing philanthropic donations.
NGOs are also purely non-profit organizations that rely on charitable donations and fundraising to survive.
As such, neither are sustainable businesses as defined by social businesses; both lack the ability to consistently generate income in order to grow in any significant fashion.
Meanwhile, social entrepreneurship initiatives that contribute towards a social vision may be driven by corporate, non-economic or even business intentions–but are still different from a typical definition of what defines a social business.
In summary, while all the concepts discussed have the potential for positive change in society, only a true social business stands out when it comes to sustainability and actual economic scalability for an organization wanting to bring about relevant change.
The Key To Starting A Social Business Is Identifying And Focusing On Solvable Problems
When starting a social business, the key is to begin by identifying a social issue that you want to solve.
It’s important to keep in mind that your main goal as a social business will be to serve a social purpose and not just make money.
Therefore, ask yourself what needs exist in the world and what bothers you most? Try to figure out the root of these needs so that you can get an idea of how to go about tackling them with your skillset and talent.
As an example, take Cure2Children – they identified a need for healthcare in impoverished countries and looked at thalassemia specifically.
Once you identify these needs, choose one problem that you think has the greatest chance of being solved by your social enterprise.
Instead of attempting something too complex for being new to the game, try making simpler problems more manageable ones first.
Creating A Balanced Business Plan Is Key To Securing Funding For Your Social Business
Securing funding for your social business is an important step in the process, and to do this you need a reliable business plan that will attract potential investors.
Your business plan should include a comprehensive five-year budget and forecast of expenses and income, demonstrating not just the viability of your idea but also the balanced cash flow it can produce on both a weekly and monthly basis.
It can also be beneficial to structure your social business around the framework of a for-profit company.
This is despite some legal risks associated with it since laws in some countries could require you to seek maximum profit for the owners.
To reduce this risk, it’s advisable to have your investors sign documents certifying that they won’t receive any profit beyond their initial investment.
Although not ideal, this alternative is still preferable compared to using a non-profit structure which faces considerably more scrutiny due to tax exemption privileges.
The Need For Social Businesses: Leveraging Capitalism To Address Global Inequality
The global economic system of capitalism has brought improved living conditions, increased wealth and better quality of life to many people, particularly those in Europe and North America.
This is a success story to be proud of!
But unfortunately, not everyone has experienced these positive changes; poverty persists for millions worldwide.
In an effort to address this disparity, the United Nations identified the Millennium Development Goals – these goals included cutting down the global poverty rate by half.
In response to this ambitious goal, significant progress in reducing the absolute rate or number of people living in extreme poverty was made over the years.
And yet, it’s clear that capitalism alone is not enough to tackle persistent inequities around the world.
The example of 2008’s financial crisis is proof; high commodity prices caused a food crisis which left countless individuals hungry at its wake.
It became obvious that our current system fails to take into account the needs of all people when too few are allowed to benefit from widespread prosperity.
This is where social businesses come in: they add an important element of doing good while also providing benefits that sustain a business model so that everybody can gain something out of it.
Social businesses like GVW (Grameen Veolia Water), a joint venture between Grameen and Veolia Water, strive to improve access to clean drinking water in rural Bangladesh.
Their efforts have already allowed close to 20,000 people in Goalmari village to drink safe and affordable water!
The Building Social Business Book summarizes the importance of social businesses and how they can make the world a better place.
These businesses must consider a social, economic or environmental goal at the heart of their operations and forget about seeking to turn a profit for investors.
To come up with an idea for your own social business, start by asking around to try and find an issue or problem that requires help.
The possibilities range from helping disabled people, children, seniors or anyone else who needs it.
By engaging in conversations regarding what problems people have or know about, you will likely get some inspiring ideas worth further exploring.
Overall, this book is a great source of information on the subject of social businesses and provides lots of actionable advice on where to begin with starting one such business yourself.