What is Social Business?

 

A Social Business is a non-dividend company created to solve a social problem. Like an NGO, it has a social mission, but like a business, it generates its own revenues to cover its costs. While investors may recoup their investment, all further profits are reinvested into the same or other social businesses.

A Social business is a cause-driven business. It must be financially sustainable and mission-oriented. The company must achieve its social objective and at the same time cover all costs through a revenue model. The success of the business is not measured by the amount of profit made in a given period, but the impact of the business on people or the environment. Investments in social businesses purely support the accomplishment of a social objective, and an investor should desire no financial gain. In fact, in a social business, investors/owners can gradually recoup the money invested, but cannot take any dividend beyond that point. Examples of social objectives are: healthcare for the poor, housing for the poor, financial services for the poor, nutrition for malnourished children, safe drinking water, renewable energy, etc. In short, Social businesses are non-loss, non-dividend companies created to solve social or environmental problems. 

Sample of Social Business: Bakery Mariaman, Haiti

 

•Establish the first bakery in the area of Mariaman

•Financially support a local school (up to 125 students)

•Provide employment opportunities for local residents

Business Model

•The bakery was built in order to meetdietaryneeds of the people in Mariaman.

However, the bakery willalso be used to finance the Christian Academy, a local school that was built in the aftermath of the 2010 earthquake.

•The bakery will offer a wide range of products, categorized into two main groups:

1.Breads (of different types and sizes): Traditional bread in different sizes and vitamin bread, a specialproduct with the aim of helping students take vitamins that are essential to good nutrition.

2. Sliced Bread: this production is planned for the long term and to be sold primarily in supermarkets.

•This business will prove to be highly competitive because of

the lack of competition in the designated area. This represents a

huge opportunity for the company that will be the leading distributor and manufacturer of bread in the area. In terms of logistics and accessibility, it will be easier for consumers to maketheir purchase without having to travel so far.

•The quality of the products will be one of the bakery’s strengths, clearly standing out from its competitors in terms of freshness and health. The employers will undergo a thorough training in order to make sure they possess the necessary skills.

•The distribution chain of the bakery will use direct sales – there will be a point of sale and delivery in the company and there will also be a delivery service. Communication channels such as local radio stations, churches and schools will be used extensively topromote and sell the products.

•The company will be able to repay any liability in the eighth year and will continuously use a part of the profit to cover the costs of the local school.