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Social Business: Enterprise Without Profit

Jun 26, 2008
'Non-profit' and 'business' might seem initially to be contradictions, or mutually exclusive terms that can't be seen in the same sentence. However, this is certainly not the case. In recent years, a new type of enterprise has grown - the social business, a non-profit organization designed to help others or to benefit the community. The idea has proven successful in a number of different industries, and those that practice it receive press coverage and substantial PR benefits as an upshot, as well as helping to make a real difference as far as those that benefit from their work is concerned. But is it really different from any other type of business, and are the rewards of non-profit, social business as clear-cut as they are with other types of operation?

Non-profit businesses generally conjure images of charities, but that doesn't necessarily have to be the case. A non-profit business is, by definition a business that doesn't aim to make a profit. Thus the business can still be profitable and use those profits to some wider social or community good. Generally, non-profit businesses trade just like any other, and use profits realized from that trade to improve the lives of others through working on particular projects or providing grants or scholarships. This has an obvious PR benefit, and can help lead to greater cost-efficiencies in the marketing side of the business. What's more, customers are far easier to convert when they are aware of more charitable or social aims underpinning a particular business entity. Thus simply by taking excess profits, after reserves of course, and diverting them towards projects for the greater good, non-profit business owners can benefit from helping others and growing their business.

Furthermore, profits are only for shareholders, and in businesses that don't intend to float there's no reason to make a profit every year. After salaries have been paid to the directors, there's no real reason to have anything left over, and any money that does remain should be paid away to directors, to company reserves, or alternatively in the event of a non-profit business, to some social good. Thus the personal finances of the business owner can be exactly the same as they would be otherwise, with the exception of diverting profits towards charitable or social projects, providing a greater sense of purpose as well as generating more beneficial public relations and improving the perception of your business amongst customers and the community at large.

Clearly, social non-profit business is on the ascendancy. Business owners that elect to donate their profits to particular community or charitable projects still earn enough money to live comfortable lives, and they still reap the personal benefits of business ownership. In fact, it can be argued that those indulging in social entrepreneurship can actually grow more substantial businesses more quickly, because of the PR and media machine that's quick to publicise the work they do. In a nutshell, it is possible to approach business from a completely different angle and work with community and social projects in order to make a real difference without sacrificing the financial benefits running a business can bring.
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CityLocal aims to be a local hub for business and the community. With A CityLocal Business Franchise, You Can Choose Your Own Hours and be Your Own Boss. Visit www.citylocal.co.uk and www.citylocal.ie for more information on territories available and the CityLocal opportunity.
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