Building social business

Read by many, discussed by many more, took in consideration by some, denied by others, the social business concept designed by Muhammad Yunus has in my opinion at least one good starting point: it tried to change for the better the life of many poor people.

The book outlines the important contribution of ‘social businesses’ in solving social issues that couldn’t be overcome via traditional models, giving examples and case studies of big corporations that embraced the concept and tried to give some answers to several social challenges of nowadays. But it reaches also the entrepreneurial spirit of each of us animated with idealistic dreams of changing something within the fixed structure we live in, by initiating small social businesses where there is need and dedicate time and energy to a cause worth fighting for.

The concept of social business got structured in the eyes of prof. Muhammad Yunus by looking at the business world from a different perspective: not only a personal gain but also a help to others, built and developed on the selfless part of human nature. So, the social cause remains the main objective and the business frame gives the opportunity to extend the life of the initial investment, because social business is not a not-for-profit entity, it’s not a normal dividend company nor a simply provider of product and services adapted for poor areas.

It’s a new idea turning into a business that has 7 principles at the core:

1. A social objective.
2. Financial and economic sustainability.
3. Investors get back only their original investment.
4. Profit stays within the company for expansion.
5. The company will be environmentally conscious.
6. The workforce is better paid that standard conditions.
7. It will always be done with joy.

Looks unreal? For some big names as Veolia Water, Adidas, BASF, Otto Gmbh, Danone, Intel Corporation became a reality, organizing social businesses around most pressing needs of poor people, most of them in Bangladesh.

All 9 chapters deal with how to launch a social business, legal and financial frameworks underpinning a social business, creating the infrastructure for successful growth within a social business, and some of the problems in establishing and scaling a social business.

I am still figuring out what it works and what should be changed in the model, but I think that we should stick to the best part of it: let’s believe and try to build a world we feel happy about!

Kickstarter: A New Way to Fund & Follow Creativity

Kickstarter is an online funding platform for creative projects in the world such as music, film, art, technology, design, food, publishing and many more. Although it is not directly targeted to solving social issues, I find it’s business model very intriguing based on people with mutual interests and motivations and their willingness to share, help and collaborate.

WHAT:
Kickstarter is an online platform that allows almost anyone to raise funding from potential interested individuals.
Baio, Kickstarter’s CTO, explains:
“The model is simple: a project creator sets a fundraising goal, deadline, and an optional set of rewards for backers. If the goal’s reached by the deadline, then everyone’s charged via Amazon Payments and the backers get their goodies. If the goal’s not reached, nobody’s charged. It’s all or nothing.”

WHO:
Anyone with an interesting project idea that needs funding but doesn’t want to go along asking friends and family for financial support can communicate with the masses through this platform. Kickstarter’s community members, aka ‘backers’, browse through the projects, choose the one they are interested in, and help co-found the project by donating part of the funding.

HOW:
The attached diagram is a simple way to explain how the business model works. Kickstarter recieves small payments from the ‘backers’ who wish to support a certain project. In return, Kickstarter provides the ‘creator’ of the project with exposure on its online platform and with the required funding to complete the project. The fund seeker, in order to convince the community members to support the project, will have to promise exclusive and personalized gifts as an incentive depending on the amount donated.
If the full amount of money pledged is raised within the given period of time, the project goes through. If not, and in order to protect both parties, the project is annulled and no money is charged upfront from the members.

Check out some of the wonderful projects completed or in the process on Kickstarter’s webpage: http://www.kickstarter.com/