10 April 2009

Creating a Social Business

I am starting up a business selling granola that I make. I have thought about this quite a bit and although it started as a response to a need to compliment our falling salaries, I really want it to have some sort of social purpose. The world is largely as it is because people like me have felt the need to make more money and have started profit maximizing businesses (PMB's) irregardless if that meant underpaying or cheating employees, damaging the environment, producing low quality products or using deceptive advertising. By publicly selling shares in the company they have even created a legal obligation to maximize profits for the shareholders.

Of course there have been noble attempts to assuage the guilt some feel for having done this by creating foundations that push corporate social responsibility (CSR), especially when educated consumers avoid patronizing companies that harm society. Unfortunately CSR is an inadequate response to this problem because in the end the company must turn a specific profit: this is the bottom line and any socially responsible action will never amount to more than window-dressing.

So, I'd like my granola selling business to be what Muhammad Yunus calls a
social business. In short, it is a business with the explicit objective of creating "social benefits for those whose lives it touches." It is cause driven instead of profit driven. As a business it should earn a profit, although any surplus is reinvested in the business to be "passed on to the target group of beneficiaries in such forms as lower prices, better service, and greater accessibility." Turning a profit also assures sustainability for the pursuit of long term social goals.

As I see it, then, I have basically two options:

1. Compete in the luxury market and channel a percentage of earnings to an NGO that works to truly alleviate poverty. I am on the board of directors of a Grameen replica credit and loan cooperative (La Cooperativa DeTodas) and the money my business would send their way would be used as loans for poor women to start or strengthen their small businesses.

2. Target the granola to these same low-income women and their children and together with some yogurt producing friends of mine, offer nutritious, filling and cheap breakfast and school lunch food.

Of course I could do both as they don't seem mutually exclusive. Maybe I could start with option 1 and develop option 2 as circumstances permit.

So, I would like to do some crowdsourcing here. What do you all think? Which option is better? How should I set this up so that I don't lose track of the social goals while complimenting my income? Ideas are welcome!


Vahid said...

you are considering giving jobs to people that need them as part of the business plan i suppose? And teaching people from non-competing markets how to do their own?

Justin said...

Those are both possibilities, although it's too early to make either call. For example, I haven't decided what market to compete in, so I am not sure who would come from a non-competing market. I think that running a social business means a lot of things that all contribute to making its focus social, and they all need to be considered in due time as the business grows. Of course the business has to actually grow first, which is my first real challenge.

Jordan said...

1.) Adding me to the business counts as growth.

2.) You could filter all the revenue into a separate bank account under my name in which I would have sole access. That way, acting as your financial conscious, I will be able to eliminate any greedy inclination towards complimenting your own income before thinking of the people first.