How does it work to have positive impact as the main outcome of a business and not profit? While conventional for-profit businesses have maximizing profit at the core of their business models, social businesses see profits as a tool rather than an end. Stable revenue is only a part of a much larger picture to achieve social impact.
Social businesses use the same three-dimensional model as conventional, for-profit businesses:
- The value proposition defines what type of value the business is offering on the market
- The revenue model defines how the business is making revenue from its value proposition.
- The network relations define the different market actors that a business has relationships with
These three components build what social business call the ‘Financial Sustainability Model’. However, this is only one of three important components in the business model. The other two are ‘Social Impact Model’ and the ‘Community Engagement’.
The Social Impact proposition explains the intent and mission of the business. To exemplify, SiembraViva in Medellín, Colombia, offers convenience and conscious consumption to urban dwellers yet the social proposition is to empower local farmers and increase ecological produce.
The Community Engagement: This is an imperative element to the social impact proposition and financial sustainability model. Community engagement roots the social business, ensuring the social impact proposition is relevant and that the financial sustainability model has an arena on which to act. Read more about this topic at Ericsson Networked Society site