How to start a Social Business

March 24, 2011 | By More

Out of the goodness of his heart, Muhammed Yunus gave $27 to 42 basket weavers and liberated them from ‘slave labour’.  ” …and the happiness that it brought to them caught me. And I asked myself, if you can make so many people so happy with such a small amount of money, why shouldn’t you do it more? And ever since, I’ve been trying to do more, and more, and more.
Muhammed Yunus, describing how he started thinking of a sustainable way to help basket weavers from money lenders in Bangladesh and ended up creating Grameen Bank.

A basket weaver's profit was only 2cents per basket

A Social Business is like any typical business we have discussed in this website – it provides useful products or services in exchange for money, and in this website we discuss what we need to think about, prepare and do to ensure the products and services we provide will be successful. All these tips are also relevant for a Social Business.

However, unlike a typical business, where we only focus on providing a great product or service and identify the target market for such a product or service, founders of a Social Business also focus on a specific type of market – the aim of a Social Business is to address a social problem such as poverty, education, health, and so on.

Find a sustainable solution to a social problem.  Read more about What is a Social Business.

So how do you start a Social Business?  The seven steps described by Hans Reitz of the Grameen Creative Lab is summarised below:

  1. Have a clearly articulated purpose.
    Make sure you have a clear reason for doing this. Instead of thinking of an everyday user problem in the case of a typical business, focus on a social problem instead. Who has the problem? Why does this happen? How can this be corrected? Listen to Muhammed Yunus’ video again to understand the thought process he used to solve the problem of the basket weavers in the village.
  2. Make sure the business model is sustainable.
    The problem of the basket weavers could be solved simply by giving them $27 and never seeing them again. This only helps 42 women. It this is not sustainable. Instead Yunus thought of a way to help them more permanently, and as he developed his solution in a sustainable way, he was able to help more and more people.
  3. Make sure that both what and how you do it are both about excellence.
    Even if your idea is sustainable, if you do not do it well and focus on clearly understanding the many subtleties of the problem and coming up with the best approach, you will ultimately fail, as we have seen about many other micro-credit banks that have tried to copy Grameen Bank.
  4. Don’t go it alone.
    It is very unlikely to build a sustainable business alone. You need to partner with people who have knowledge and expertise. They may be individuals, they may be companies. Surround yourself with people who are also passionate about the social problem. Build knowledge & expertise around you. But most importantly, be ready for tough 36 months.
  5. Test and pilot
    Your initial idea may be rough on the edges. Start small. Test it and see how the people you want to help feel about it. They will help you improve your solution since you are trying to help them. Listen carefully to what they have to say. Understand what they mean. Test again. Pilot. And test.
  6. Measure results
    When you had a clear purpose (step #1), you also had a clear goal, right? Then measure your results against your goal. For example, if you wanted to help malnourished children, then measure whether the children you have helped actually gained weight and are healthier. Track your results against your goals.
  7. …implement with joy.
    Most importantly enjoy what you are doing along the way!

Now listen to a story from one of the 6 million women who was helped by Muhammad Yunus’ sustainable Social Business called Grameen Bank:

Read more about How to write a Business Plan.


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Category: Ideas, Social Responsibility

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About the Author ()

EngTong, pioneer and innovator. Graduated from Imperial College London with an MBA from Cranfield School of Management. Lived in Scotland, England, California, Beijing and led teams in Italy, France, Japan, Taiwan and Malaysia to do the impossible. Now based in Singapore and believes the future is to blend the sophistication of western management practices with the strength of Asian Values. Trained as a Chartered Engineer. Member of IET, Associate of City and Guilds and a certified SixSigma Champion.

Comments (1)

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  1. A Arthur says:

    Hi EngTong, a very inspiring post. Apart from winning many international awards, Mohammad Yunus received the Nobel Prize in 2006, for his microcredit and financing schemes in helping the poor and destitute in Bangladesh. Excellent write-up on Social Business, where the focus as you put it, is on a specific type of market – the aim of a Social Business is to address a social problem such as poverty, education, health, and so on.