A social business is a non-loss, non-dividend business

Owners of most commercial businesses draw dividends as a form of salary. A social business should not allow its owners to draw dividends, and instead reinvest their profits back into their organisation.

The third principle of social business is that they are non-loss, non-dividend businesses. This is a description that Muhammad Yunus uses in his recent book.

Social businesses are not charities, and instead aim to make a profit, but a key difference is that they do not draw these profits as dividends, and reinvest them back into the organisation.

Reinvesting the profits allows this money to be used to extend product lines and focus on new markets and opportunities, which would have not been possible if the profits had been drawn as dividends.


Mike.

10 key principles of social business

With the concepts of social business being new to so many people I've listed what I view as the key principles.

These principles have come from a number of sources, with Muhammad Yunus' recent book providing the bulk of the 10 key principles of social business:

1. Primary purpose is to address social issues

2. Owned by the beneficiaries of the social cause

3. A non-loss, non-dividend business

4. No reliance on donations or grants

5. Profits are reinvested in the social business

6. Investors are paid back

7. Salaries are paid at market rates

8. Products and services are sold to cover costs

9. A clear vision and objectives are at the heart of the organisation

10. Performance is measured against the organisation's objectives


Mike.

Building social business ventures

Muhammad Yunus describes the need for a new kind of capitalism: one that puts people first.

He explains that economic viability can magnify the impact of social causes and the support systems required for the new model of capitalism to reach its vast potential.

Mike

Grameen Danone

A speech from Muhammad Yunus on the Grameen Danone partnership, which was set-up in 2006 in Bangladesh, and provides a model social business.

Mike.