Seven Principles of a Social Business

The social business model was put into place by Professor Muhammad Yunus of Bangladesh. He declared that there are seven principles a business must meet in order to be considered a 'social business'.

?The first principle states that the goal for a social business will be to overcome poverty or deal with some problem like education, nutrition, healthcare, environment and enabling technology access for the underprivileged and not just for profit or for share holders wealth maximization.

The second principle talks about the financial & economic sustainability. Any social business is disallowed to take funds from outside i.e. grants or NGOs. Money goes into investing.

The third principle is about the return on the investment. Investors in a social business are not allowed to take money beyond the investment.?

The fourth principle dictates that the money earned through investment is to be reinvested into the social business for improvement -> the purpose of this is to reach out to more people and/or to improvise the quality of services.

The fifth principle decrees that social business are supposed to think about the well being of the environment. Their services are meant for the betterment of the environment whether it be directly or indirectly. Indirectly signifies business operations will do no harm to the environment.

The sixth principle states that employees must get fair compensation (in accordance with the industry benchmark). The long term result is that the workforce will get better working conditions.

The seventh and last principle is that the goal of the business is not profit maximization. This concludes that those who have a passion for contributing to the society and the environment will run a social business -> this results in the business running in a happy, stress-free environment.

Examples of business that follow these 7 principles are the NIKA water company and the Grameen Bank.