A Social business is cause-driven; it applies commercial strategies to maximize improvements in human and environmental well-being, rather than maximising profits for external shareholders
Social business can be formed as a hybrid i.e. it can be structured as ‘for profit ‘and a ‘non profit’ concurrently. Wealth creation is simply a means to an end that drives the social entrepreneur to participate in profit-seeking business ventures only to use these profits generated to create valuable social programs for the whole community.
Cooperatives are but one entity that is regarded as a social business. Why? Because members of a certain community, that shares the same interest will form a business to alleviate a social problem. This problem usually stems from poverty and unemployment.
Three characteristics distinguish a social business from other types of businesses, nonprofits and government agencies:
- It directly addresses problematic social need and serves the common good, either through its products and services or through the number of disadvantaged people it employs.
- Its commercial activity is a strong revenue driver
- The common good is its primary purpose
Social businesses produce measurable public benefits
- Financial Responsibility — It reduces the myriad costs of public supports for people facing barriers, by providing a pathway to economic self-sufficiency for those it employs.
- Public safety — It makes the community in which it operates safer, by disrupting cycles of poverty, crime, incarceration, chemical dependency and homelessness.
- Economic opportunity — It improves our pool of human capital and creates jobs in communities in need of economic renewal.
- Social justice — It gives a chance to those most in need.
Social Businesses takes risks and comes up with innovative ideas equally as the normal entrepreneur. Some of these innovations might not be successful, but it surely makes people aware of the social problems that impoverished communities face. Social businesses are responsible for paradigm shifts in communities. They are the drivers of measurable economic and social change. It is very seldom that a social entrepreneur will quit when the going gets tough.
The primary indicator of success lies in the actual impact of the social initiative. To put it simply, a social venture is successful if it achieves its intended social impact.
The business is intended to be a change agent for society, seizing opportunities to improve systems, invent new approaches, and create solutions to change society for the better.
Businesses might create an entirely new industry, but the social entrepreneur develops innovative solutions to social problems and then implements them on a large scale.
Having a social business is not easy, but with the correct planning, a good business case/ model and a proper implementation plan, then it will most likely not fail within the first year of operation.
The combination of passion a solid, durable social mission with a business-like discipline, innovation, and determination are valuable tools for the success of a social business.