What is Social Business?
A company that works to further a social cause is known as a social business. The investors’ investments are made solely to advance social welfare, not just for personal gain. However, the investor may receive his money back after a specific period and pay for all organization expenses. Sectors like healthcare, housing, nutrition, education, and financial services for the underprivileged continue to be the top priorities, even if the social business can be conducted anywhere. The amount of influence or good change a social business can take on the world as a whole, as opposed to profit-making companies, determines how successful it is.
Muhammad Yunus introduced the idea of social business, essentially presenting it as an alternative to capitalism. It was intended to alleviate the drawbacks and faults of capitalism, which ignores or fails to address other aspects of the business and only concentrates on making a profit. He developed a new framework where social businesses and for-profit ventures coexist. Additionally, social firms can still turn a profit.
However, they are not permitted to pay dividends or reinvest profits back into the company to expand operations and serve the greatest number of customers possible. The idea of social business stresses an action-based system where the impoverished participate in or progress as opposed to inventing ways to help the poor or a trickle-down economic system to help the poor. This was used by Professor Muhammad Yunus to form Grameen Bank and provide microcredit to the underprivileged without the need to pledge real estate or other assets as collating.
