What's Next congres 2016 - Pol de Greve

‘There is no business like social business’ Introduction to social business concepts and models

SOS Children’s Villages Pol De Greve

What’s up Doc? 1

Opening by Marjolijn Geels

2

The voice of the youth

3

Joyce Eku’s social business story

4

Presentation about social business models

5

Faiza Mustapha presents her story

6

Issam Chleuh sheds a light on challenges in social business development

7

Public interference 

8

Joint reflections and discussion with Joyce, Faiza and Issam in the panel

The team Ms Joyce Eku, social activist, entrepreneur and trainer (Accra, Ghana) Ms Faiza Mustapha, fashion designer, shop owner and trainer (Accra, Ghana) Mr Issam Chleuh, impact investing thought leader and entrepreneur (Bamako, Mali) Mr. Pol De Greve, social business support service provider (Utrecht Belgium) 2

Key questions –take away at the end  What is a social business?  Why is it that social business development is a good approach to lift youngsters out of poverty?  What is needed to make a business “social” and what are the challenges?  What (business development) support services are needed for young start-ups?

3

A crowdy start: a general business concept

Business investment concerns the use of scarce resources in the expectation of creating (future) benefits. These benefits can be of a financial as well as non-financial nature, they may include tangible as well as intangible benefits.

4

Creating Blended Value 1. Every business creates value.

2. Most businesses create multiple, so-called ‘blended value’ (financial, social and environmental).

3. The nature and balance of value creation is a strategic issue.

4. This decision is at the very heart of a business model.

5. Key question: what values does an entrepreneur want to create and for what purpose?

→ Hence a differentiation on a gliding scale among businesses.

5

The essence of a social business approach  Creation of ‘blended’ value / multiple values,  that are relevant for those directly involved and for society as a whole  such as social change, child well-being, improved environment, gender equity, shift in power relations, social justice, et cetera  and subsequently leads to more than financial returns.

6

Drawing the lines

A social business is a financially viable business that works with a market based business model and aims at optimising social and economic impact.

•7

Business typology Driven by Shareholder’s value (finance driven)

‘Profit’ business

Business +charity Business + weak CSR Business + strong CSR

Driver is Social value / change (impact driven)

Shared Value Creation Social Business Social Enterprise charity with an earned income NGDO/Charity

What: typology of businesses 1.

2.

3.

4.

5.

6.

7.

8.

Traditional for-profit business; Traditional for-profit in combination with corporate charity; Weak Corporate Social Responsibility (CSR); Strong CSR; Shared Value Creation (including ‘Inclusive Business’); Social business; Social enterprise; Traditional not-for-profit (different manifestations).

9

The continuum from charity to commercial business

Driven by social impact

Driven by Blended Value Creation

Only impact

Driven by financial profit

Impact first

Finance first

Organsiations with a social purpose

Charity Social organisation Donations No turnover from market operations

Donations Limited turnover from market operations

Social enterprise that generates turnover Potentially sustainable : up to 75% turnover from market

Breakeven 100% turnover from market

Profitable Profit used for a social purpose

Social Business social and financial returns are integrated

Commercial Business

Strong CSR component

Business donates part of profit to good cause

Shareholder value is leading

Who finances what ‌ Social donor grants – donations – subsidies etc.

Social investors - NGOs

Impact Investors Commercial Investors

Adapted from presentation by Dr. John Hoffmire, Said Business School Oxford

Common Social Business Models Cross-Compensation – One group of customers pays for the service.

Profits from this group are used to subsidize the service for another, underserved group like running a school with differentiated fees (rich parents pay more than poor parents) or Waka Waka solar lamps

Common Social Business Models Fee for Service – Beneficiaries pay directly for the good or services provided by the social enterprise like social supermarket selling discounted food = food donated or purchased very cheaply from food suppliers and other supermarkets, who cannot sell the food themselves for a variety of reasons

Common Social Business Models Employment and skills training – The core purpose is to provide living wages, skills development, and job training to the beneficiaries: the employees like Jamie Oliver restaurants

Marum Restaurant Siem Reap Friends International The restaurant offers job opportunities and skills training for street children and marginalised youth. The restaurant prepares original high-quality Asian cuisine to middle and high income residents and tourists .

Common Social Business Models - continued Market Intermediary – The social enterprise acts as an intermediary, or distributor, to an expanded market. The beneficiaries are the suppliers of the product and/or service that is being distributed to an international market like fair trade.

Common Social Business Models - continued

Market Connector – The social enterprise facilitates trade relationships between beneficiaries and new markets like e-shop for young artists to sell to wealthy city dwellers

Common Social Business Models - continued

Independent Support – The social enterprise delivers a product or service to an external market that is separate from the beneficiary and social impact generated. Funds are used to support social programs to the beneficiary like 5-star Red Cross Hotels. Questionable whether it is social business?

Common Social Business Models - continued

Cooperative – A for profit or non-profit business that is owned by its members who also use its services, providing virtually any type of goods or services like famers unions.

Let’s talk (social) business …

Link up with three neighbours and discuss the following –

If you were wealthy and social, willing to invest in a social enterprise and keen on doing so for and with young people, • What would your preferential type of business be? (if any) • Why this choice?

• What do you expect will be the major challenge that you young entrepreneur may face?

• Who and how can she be supported to overcome this challenge?

25

Common Social Business Models Cross-Compensation – Profits from this group are used to subsidize the service for another.

Fee for Service – Beneficiaries pay directly for the good or services provided by the social enterprise – social shop Employment and skills training – Jamie Oliver restaurants Market Intermediary – The social enterprise acts as an intermediary, or # distributor, to an expanded market like fair trade.

Market Connector – The social enterprise facilitates trade relationships between beneficiaries and new markets Independent Support –the 5-star Red Cross Hotels

Cooperative – A for profit or non-profit business that is owned by its members.