Social business can play a powerful approach in the long run. If the world follows the social business approach, it is expected that there will be no poverty in this world, and we can only see poverty in the museum, according to economist Muhammad Yunus. The unique characteristics and participles of social business make it stand alone.
The importance of sustainability is acknowledged by all in this world. However, it is still in the awareness stage, not the execution stage yet. We all agree that we need to take action to become more sustainable. But the cost of sustainability is high. Interestingly the price is higher if you do not follow the path of sustainability.
In my previous article, I have already mentioned how social businesses help in achieving sustainable development goals (SDG). In this article, I will discuss the social business approach and its power to shape the world of sustainability. Let’s look at what social business is about first.
Social business is a self-sustaining profit-making business whose objective is to address and meet social problems. According to economist Muhammad Yunus: “It is a balance between sustainable financing through which the company covers all costs and makes profits and achieving a multitude of social causes such as basic service provision for the poor, introducing renewable energy and providing safe drinking water.”
Unique Characteristics of Social Business
Yunus developed seven social business principles that entrepreneurs must follow if they want to establish their social business. These principles are the DNA of a social business. Social business is not only just a business approach but has some unique characteristics. They are:
- The social business is not just a profit-making business; it has a big vision to solve society’s problems.
- Social business individual gain is not focused; instead, people are the center of the business.
- In the social business, no dividend is paid to the shareholders except the original investment amount.
- The profit of the social business is used for expanding the business operation and impact, not for individual gains. Therefore, it helps achieve the SDG goals directly and indirectly and creates an essential effect on society.
- A social business is a kind of business where people do what they love and work with joy.
How Pivoting to Social Business Can Drive Sustainability
Social business is a kind of business that addresses society’s needs while at the same time making profit and sustainability as well. In this way, the social business contributes to achieving all SDGs directly and indirectly. For example, Yunus Environmental hub is working towards mitigating climate change and focusing on SDG goals. Therefore if the number of social businesses can be promoted and increased, it will also positively contribute to the future of a sustainable world.
Harnessing the Power of Social Business
Yunus elaborated on some techniques by which we can enhance the power of social business. Let’s look at how we can harness the power of social business:
- First and foremost, creating awareness about social business among young people. If young people become aware of it, they can make better choices. They must know that there are two types of business — one is only for making money, and the other is doing good for the people.
- Secondly, creating or allocating funds for social business can help to enhance its power. For example, large and multinational organizations can introduce their own social ventures with their CSR fund or they can use the fund for supporting other social businesses by which they can create more impact on society.
- Lastly, establishing the social business stock market can be a long-term strategy to enhance the power of social business.
Humans are undoubtedly selfish beings, but they are also selfless. However, economics does not take this aspect of human nature into account. The major problem in our economic thinking is this misguided understanding of human nature. The several issues that we are currently facing were aided by it over time. It is even more crucial that we redefine and enlarge our current economic framework in light of social business’ great potential.
The world is changing quickly; therefore, now is the moment for daring and original ideas. A new approach to economics is required, one that can prevent crises from recurring and potentially end them permanently. The first step of formulating this new framework should include social business as an essential element of the economic structure: we can run both types of businesses — for-profit and social business. The thought of combining the two is appealing.
The exciting conclusion may be leveraging the money earned through ethical firms that maximize profits to fund social businesses. Thus, people in the future may choose over selfishness and create social businesses to change the world.
Photo: Party people studio/Shutterstock
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