By Julie King
Two financial statements are used by financial institutions to evaluate a company's loan application, the Income Statement and the Balance Sheet.
The Income Statement shows the sales (incoming revenues) and expenses over a set period of time. This statement is a good indicator of the profitability of a business during a particular period, as it shows the net result when the sales of the business are put against its expenses. The Balance Sheet, on the other hand, shows the business assets, liabilities and shareholder capital on a specific date, and as a result gives a good picture of a company's financial position.
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Assets are anything with commercial value that your business owns. They are divided into three categories: current assets, fixed assets, and other assets.
Current assets are cash, accounts receivable, inventory, and other assets that will likely be turned into cash, bartered, exchanged, or converted into an expense within a year during the normal course of business. Included in the “other current assets” category are loans to shareholders, also known as due to shareholders.
Some business owners will not pay themselves a salary, preferring to take drawings, which they must deal with at year-end. In the current assets section, due to shareholder amounts may artificially inflate current assets if you plan to convert them to bonuses, dividends or management fees at year-end, at which time they become expenses of the business.
Fixed assets have commercial value but are not expected to be consumed or converted into cash in the normal course of business. They are long-term, more permanent or "fixed" items, such as land, building, equipment, fixtures, furniture, and leasehold improvements.
Fixed assets often decrease in value (depreciate) over time due to wear and tear from use. The federal government allows businesses to depreciate items for tax purposes, and it has defined specific depreciation rates for different categories of fixed assets. On your balance sheet, therefore, you will see the initial value of the asset, the amount of accumulated depreciation, and finally the net depreciated value of the asset.
Example of a fixed asset on the balance sheet:
| Vehicle | $ | 28,000 | ||
| Accum Deprec - Vehicle | $ | -8,500 | ||
| Total Vehicle | $ | 19,500* |
* Net depreciated value of the vehicle.
Other assets are things that don't fit into either of the above two categories, yet still belong on the balance sheet. They include things like prepaid expenses, which have value but are not fixed or necessarily to be converted into cash value during the current business year.
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Liabilities are company debts or obligations to outside parties as a result of goods or services that were transferred to your company on a specific date that has already passed. Current liabilities are the portion of those obligations that are to be paid out during the course of the year, while long-term liabilities are the portion of your company's obligations that extend beyond that timeframe.
Current liabilities include accounts payable, accumulated taxes and payroll liabilities, and the current amount owing on business loans and/or leases.
Long-term liabilities, meanwhile, include the balance of your loans, leases, and other liabilities beyond the current calendar year.
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While Intangible Assets do not appear directly on your balance sheet, they can be a significant factor when one looks to buy or sell a business or part of the business. Intangible assets include things like good will; intellectual property such as copyrights, trademarks, patents; leases; franchises; permits and so on.
While you do not list these assets on your balance sheet, they are reflected in the sense that they enable you to maintain profit margins and market share, so in turn they show up on the current assets section of your balance sheet through the revenue and profits they create.
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Something that is often difficult for new entrepreneurs to grasp is the way equity is calculated on the balance sheet, where the total assets always equal the total liabilities plus equity.
In other words, your company's equity is equal to the value of its total assets minus its total liabilities. If the business assets are greater than the liabilities, which is hopefully the case, then the equity of the business is the positive difference between the two numbers.
Sample equity calculation:
On Company ABC's Balance Sheet, the Total Assets are $100,000, while the Total Liabilities are $40,000. In this case, the difference between the assets and liabilities is $60,000. Since equity is equal to this difference, the equity of Company ABC at that time is $60,000.
If Company ABC had Total Liabilities of $50,000, with its Total Assets staying at $100,000, then the equity of Company ABC at that time would be $50,000. The increase in the total liabilities of the company in comparison to its total assets causes the equity of the business to drop.
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Companies need to have specific, identifiable and defendable missions and beliefs
Mention the word "branding" and most people think of multi-national companies putting a high sheen on a new product or a political candidate adding a varnish to his latest image. But branding is not mere window-dressing, nor is it a marketing trick--and even the smallest businesses need to do it, according to Debbie Millman, who is the president of the design division of Sterling Brands. "Everything in our world is branded," says Millman, who has worked on the redesign of global brands for Pepsi, Procter & Gamble, Colgate, Nestle and Hasbro. "We create constructs to understand ourselves, the way we look, how we feel, what we believe--and we telegraph that 'branding' to the world." Even marriage is a brand, she explains. "You have the ring which is the symbol and the ceremony which is the ritual and you have certain things associated with the institution. And there are specific associations if you are not married." Millman says that companies--whether big or small, new or old--need to constantly telegraph what they stand for and how they want to be perceived, both by their customers and their competitors alike. "A brand," she says, "is simply a set of beliefs. And if you don't create a set of beliefs around your products or services, well, you stand for nothing--you have no values and no vision." She says that every company has to ask if they have a very specific, own-able and defendable mission. "If it doesn't,"Millman says, "then you are not creating something that is distinct enough to survive. And, frankly, you have to ask yourself is it worth surviving anyway." She says that if a company fails to position itself, it's customers will do it for them--and that clearly is not a good way to run a business over the long term, or even the short term. Millman advises that, along with the business plan and the hiring, entrepreneurs think long and hard about their brand and either figure a way of building it themselves or hiring a professional to do it for them. "If not, they're lost," she says. --John Montorio
In Praise of the "Gazelle"
The fastest-growing companies--"gazelles"-- generate about 10 percent of all new jobs
What's the best way to create new jobs? Encourage startups. At least that's the straightforward solution, according to a recent study by the Kauffman Foundation. Dane Stangler, a senior analyst with the Kansas City, Mo., research and education center, noted on the center's website that in any given year the fastest-growing startups--or so-called "gazelle" companies--comprise less than 1 percent of all businesses, yet generate roughly 10 percent of all new jobs. The study recommends several strategies to promote entrepreneurship, including: Removing as many barriers as possible that stall startups--rules that block access to capital, as well as taxation and regulatory burdens; targeting immigrants, which have been known to produce high-growth firms but often suffer from bottlenecks by establishing, for example, a new visa program for those who can raise $250,000 for their startups; and eliminating restraints at the university level that impede researchers from commercializing their innovations. "Without startups, our research shows that net job creation in most years would be negative, so policies that expand firm formation could increase both job creation and the number of high-growth firms," Stangler said. --J.M.
Use Your Head
You can go with your gut, but there's nothing wrong with good old common sense
We've all heard the stories of the entrepreneurs who succeeded by going with their gut, or because they were brave enough to break what everybody else assumed were the rules. But good, old common sense helped, too, says Nelie Shah, president of Nothing Falls Short, a New York-based marketing firm. Shah, whose client roster includes American Airlines, AT&T, Ogilvy & Mather and Kinkos, offers this straight talk:
When Small is Big
Four ways the estimated 29.6 million SMBs in the U.S. generate a big impact on the economy
Source: U.S. Small Business Administration Office of Advocacy, September 2009)
History on Hold
If you call the Census Bureau, you're in for an educational treat
Being put on hold usually means bad elevator music or a boring infomercial. But if it happens to you when you call the Census Bureau, at 301-763-INFO (301-763-4636), you're in for an educational treat. To fill the time until a rep gets on the line, you'll hear quirky and fascinating historical tidbits thanks to the Bureau's "Profile America" daily feature. Some on hold recently learned, for instance, that way back in April 1858 a patent was granted to an enterprising entrepreneur named Hymen Lipman for a new-and-improved product: the pencil - but this one had an eraser on one end. Others callers found out that the first public, self-operated laundry business in the U.S. opened its doors in Fort Worth, Texas, in March 1934. Today, there are close to 14,000 Laundromats across the country doing nearly $3 billion in business. This is good stuff when you're stumped for small talk at your next convention. --J.M.
Be a Penny Pincher
Spend time each week tracking your investments
Invest at least two hours a week--that's right each week--tracking your expenses. Not only do heavies like Intuit and Freshbooks make excellent online accounting tools, but credit card companies like American Express and Bank of America offer solid online budgeting system tools as well. Work with your accountant each week--you have an accountant don't you?--to know before you start a job or a business what is deductible and what is not. Then, track that spending to the penny and keep a running tab of your tax obligation. Also, be sure that money is sitting in a liquid, interest-bearing account. Trust us, the single worst way to go down is to go broke paying last year's taxes. -- Jonathan Blum
No, it Can't Make Sales Calls
Get set up on web-based process management tools to problem solve for your business
Yes, Twitter and Facebook and MySpace are cool and all, but the real Web 2.0 upside for the small business is getting your shop hooked up on a web-based process management tool. Software like Basecamp, Liquid Planner, @task and literally dozens of others will force you, often painfully to organize your tasks, plan ahead and be smart. Plan on going insane installing these suckers to start--what the heck are "my tasks" anyway? But if you stick with it, you will build a robust problem-solving system that works for you and your business. A system that get you out alive when it all invariably goes south. -- J. B.
Keep What's Yours
Protect your identity
It's likely that you will be doing business in the beginning using your own name, address and social security number or working for other small firms with limited security and experience in managing identities. Protect yourself by establishing yourself as a corporation, limited liability company or similar business entity. Most states offer excellent online resources. Follow the steps, spend no more than a few hundred bucks and keep your personal identity personal. It's the single smartest thing you can do. --J.B.
Pain and Gain
Personal income goes up and down throughout the U.S.
On the positive front, personal income last year rose 0.7 percent in Maryland, 0.7 percent in West Virginia, and 0.3 percent in Virginia, due mostly to commuters working in Washington, D.C. But elsewhere the pain still lingers: Nevada experienced a 4.8 percent decline in personal income, as casino construction waned; Wyoming lost 3.9 percent mostly from a slide in mining; and New York, with the implosion of Wall Street, saw its personal income fall 3.4 percent. --M.J.
Business Plan Blunders
Four ways to help make your business plan work by avoiding these common mistakes
Gwen Moran is the co-author of The Complete Idiot's Guide to Business Plans, Second Edition.
Where Persistence Pays Off
Government contracting can be useful for SMBs
Even small businesses can be successful in government contracting if they're willing to start small and keep knocking on doors. So says a recent survey of small businesses by the American Express OPEN Victory in Procurement (VIP). Polling more than 1,500 business owners, the survey found that small businesses which succeed in government contracting spend approximately $86,000 a year in resources pursuing federal contracts. But the rewards can be great: 80 percent of active SMB contractors on the General Services Administration (GSA) Schedule, the list of approved vendors for the products and services the government procures, have annual revenues of at least $1 million and derive 47 percent of their annual revenues from federal contracts. Worth noting, particularly since commercial bankruptcies increased by nearly 52 percent from 2008 to 2009, according to Equifax, Inc. --Michelle Juergen
Aspiring Entrepreneurs Take Note!
The number of venture-backed deals may be going up
As the economy shakily gets back on its feet, VCs may be more willing to give you a helping hand. In the last quarter of 2009, the number of deals made in venture investment increased to nearly 800, according to the Small Business Association Office of Advocacy. Though VCs invested $17.7 billion in 2009--a far cry from the $30.5 billion in 2007--the growth from Q3 to Q4 in 2009 was hopeful; 100 more deals were made. --M.J.
The Odds of Survival
Seven out of 10 new companies survive two years or more and about 50% survive five years.
--According to SCORE Counselors to America's Small Business
In this episode of StartmeUp Videos, Dr. Steven Gedeon talks about the challenges of writing a business plan as well as the best practices for writing different sections of the business plan, how should you write the financial section, executive summery, how to create a marketing plan and much more.
How to start a business ? How to write a business plan for a small business ? How to complete the executive summery ? What is a business model? Where should I start ? is it simple ? How to prepare a business plan proposal
visit our website to find out more
http://startmeupryerson.com/
Check out StartMeUp for more business resources.
A social business is a business that integrates two objectives:
A social business can be large or small, a start-up or an established player, it can take any legal form (CICs, co-ops, Ltd companies, and so on) and can operate in most industrial sectors (it's difficult to imagine a social arms manufacturer/trader).
So do companies with grand corporate social responsibility (CSR) projects count as social businesses?
No. A further test of social businesses is to think whether or not an investment into the business which advances the commercial activity of the business will also increase its social impact (i.e. is there a clear correlation between the two and are they of equivalent importance?). If the answer is yes they are a social business, if the answer is no then they are not. Investing in Kraft or BP will not increase their social impact so, despite their efforts, they are not social businesses.
What if a business fits the definition above but does not identify itself as social?
It is still a social business. We have identified two types of social business:
Investment perspective: Social businesses can, in the case of financial surplus, return all or a portion of it to investors (in the form of capital appreciation or dividends) as well as what is known as the ‘social return’.
There are many types of social business covering many sectors; you can explore them here.
Disagree? Email us your definition!
Social enterprises mix social, environmental and commercial objectives but, unlike social businesses, they place a clear emphasis on the former. The other big difference between social business and enterprise lies in the treatment of financial surpluses, or profits. According to the UK Government:
"A social enterprise is a business with primarily social objectives whose surpluses are principally reinvested for that purpose in the business or in the community, rather than being driven by the need to maximise profit for shareholders and owners.” Social Enterprise Action Plan 2006
Investment perspective: Social enterprises must ‘principally’ direct financial surpluses back into the business or the cause it serves, whereas social businesses can distribute dividends or create value through capital appreciation.
The traditional vehicle for creating social or environmental benefit is a charity. However, an increasing number of charities are exploring and developing entrepreneurial activities to generate new sources of income. Many social enterprises are actually trading subsidiaries of a charity.
Investment perspective: Charities can only receive donations, not investment. All returns are social, not financial. Any profits made through a trading subsidiary must be invested in addressing the charity’s core cause.
The Community Interest Company (CIC) is a legal vehicle which was created in 2005, and was specifically designed for businesses with a social mission. A CIC is a limited company established for community purposes which has passed a ‘community interest test’ (ensuring it is for the community and not just for profit), and undertaken an ‘asset lock’ (ensuring the company uses its assets and profits for the public good). CICs do not receive the same tax benefits as charities but face a lighter regulatory burden.
Investment perspective: Dividends for investors are capped. The CIC is still, we would say, at an early stage of its development.
A social firm 'aims to create employment opportunities for disadvantaged people through the development and support of Social Firms'. Social Firms are market-led businesses that are set up specifically to create good quality jobs for people severely disadvantaged in the labour market.“ Social Firms UK
A co-operative is a company run and owned by its workers and/or consumers where each member has one vote; it often takes the form of an Industrial and Provident Society. There are many types of co-op, including worker or producer co-operatives, consumer or retail co-operatives, housing co-operatives, credit unions and secondary co-operatives - for more information see the Co-operatives UK website.
ClearlySo sees CICs, Social Firms and Co-operatives as 'social' in nature.
Social Business
Social business is a cause-driven business. In a social business, the investors/owners can gradually recoup the money invested, but cannot take any dividend beyond that point. Purpose of the investment is purely to achieve one or more social objectives through the operation of the company, no personal gain is desired by the investors. The company must cover all costs and make profit, at the same time achieve the social objective, such as, healthcare for the poor, housing for the poor, financial services for the poor, nutrition for malnourished children, providing safe drinking water, introducing renewable energy, etc. in a business way.
The impact of the business on people or environment, rather the amount of profit made in a given period measures the success of social business. Sustainability of the company indicates that it is running as a business. The objective of the company is to achieve social goal/s.
Clarifications on Social Business
I am not opposed to making profit. Even social businesses are allowed to make profit with the condition that profit stays with the company, owners will not take profit beyond the amount equivalent to investment. Social business is a new category of business. It does not stipulate the end of the existing type of profit-making business. It widens the market by giving a new option to consumers. It does not intend to monopolise the market and take the existing away option. It adds to the competition. It brings new dimension to the business world, and a new feeling of social awareness among the business people.
When we approach the concept of social business from the philanthropy side it looks very convincing and logical. Why everything in philanthropy should be given away. After all our purpose is to achieve the social goal. If some of these goals can be achieved more efficiently and sustainably in a (social) business format why not take that route ?
But when you approach it from the orthodox business side, it tends to look a bit out of tune. Why on earth give up profit ? Why should any one run a business without profit ? I understand the surprise perfectly.
Let me clarify: I am not asking any businessperson to give up any of their businesses. Nor am I asking them to convert some of their businesses into social business. The idea of "giving up" something creates this shock wave. I am not asking anybody to "give up" anything. All I am saying, if you are worrying about a social problem (while totally engaged in your routine business) I have a message for you, you can make a significant contribution in resolving the problem. If you put your mind seriously into it, you may even open the door to eliminate the problem globally. You can do both : conventional business and social business.
It is all upto you to decide whether you want to do a such thing or not. Nobody will raise an accusing finger at you if you do no such thing. But you may feel happy if you do it. I am suggesting a way which may make you a happier person.
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A Learning Process
It is a great learning process. You are doing things which you never did before. You are thinking in a way which you never did before. You are surprised to see you are enjoying it a lot. You start digging into your experiences to see what is relevant for the task. You check through the reservoir of technology that you are familiar with start contacting the pool of experts that you got to know in your business, to achieve your new goal. You start exploring a new world which was totally unknown to you. You realise that you are now wearing "social business glasses" on your eyes, you see things which you never saw before. You start sensing that your eyes were fitted with "profit-maximizing glasses" all along, while you thought these were your natural eyes in your economic world.
Now when you turn your eyes to your own profit-making businesses you start noticing things which you never noticed before. You bring new-gained experiences from your new business to your old businesses. Slowly you move towards becoming an multi-dimensional person, rather than a robot-like person.
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Some people ask me why can't you run businesses with some profit and some social benefit — "doing well by doing good", as it is popularly described.
Of course, it can be done. I am never against it. But I am trying go to the ultimate point where you don't make any profit for yourself at all. This is easy to identify, easy to handle in day to day decision making.
When you mix profit and social benefit it gets complicated for the CEO. His thinking process gets clouded. He does not see clearly. More often this CEO will take decision in favour of profit, and exaggerate the social benefit. Owners will go along with it. Social business gives a clear unambiguous mandate to the management. There is no balancing act involved. If you can agree to take a "small" profit, you can also persuade yourself to take zero profit. Once you get there you get rid of all old ways of thinking. You prepare yourself to explore a new world, a new way of seeing things, and doing things in a different way. When you were in the world of a "small profit" you were still operating in the old world, with old ways of doing things, only restraining yourself here and there.
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Another way to put the same question is : Why can't you allow thee investors in social business to get a small fixed profit — say, 1% dividend. My answer is the same. I may describe by saying something like this : you are in a "no smoking" building, you are arguing "Why can't I be allowed to take just one small puff ?" Answer is simple — it destroys the attitude. In Ramadan, Muslims are not allowed to eat or drink until the after the sunset. Why not take a sip of water during the day ? It destroys the strength of the mental commitment. You lose a lot for a small favour.
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Social business is about making complete sacrifice of financial reward from business. It is about total delinking from the old framework of business. It is not about accommodation of new objectives within the existing framework. Unless this total delinking from personal financial gain can be established you'll never discover the power of real social business. Some times you can set up a technically correct social business with the purpose of making profit through your other companies by selling products or services to this social business company. This will be a clear sabotage of the concept. There may be many other subtle ways by which one can weaken the concept and practice of social business. A genuine social business investors must make all efforts so that he does not walk into this trap unwittingly.
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Capitalism has created poverty by focusing exclusively on profit. It built a fairy-tale of prosperity for all. This never happened. That's why Europe decided to entrust the government to take care of poverty, unemployment and health. They were smart enough to figure out the emptiness of capitalism in solving these problems.
Author's Summary on Creating a World Without Poverty
While free market capitalism is thriving globally almost unopposed now and bringing unprecedented prosperity to many, half of the world lives on two dollars a day or much less. Eradication of poverty remains the biggest challenge before the world. Colossal social problems and deprivations, mostly poverty-related and very unevenly distributed around the globe, continue to shame us everyday. Obviously the free market has failed much of the world. Many people assume that if free markets can’t solve social problems governments can. After all, the government is supposed to represent the interests of society as a whole. But decades and even centuries of experience has shown that while government must do its part to help alleviate our worst problems, it alone can not solve them.
Fortunately for us there is a keen desire among many to lend a hand through charity for addressing the problems of poverty and other social problems. Charity is rooted in basic human concern for other humans. These days concern is usually expressed in the shape of non-profits and NGOs which may take various names and forms. Then there are aid organizations sponsored by rich governments–bilateral and multilateral. Nonprofits and aid organizations are trying to keep the problems within some control. But charity is a form of trickle-down economics; if the trickle stops, so does help for the needy. On the other hand multilaterals like World Bank focus only on growth as the means of helping the poor, but can not see that the poor people can be actors themselves. There are serious questions about the type of growth that can help the poor. As another response to the global social problems some businesses are identifying themselves with the movement for Corporate Social Responsibility (CSR), and are trying to do good to the people while conducting their business. But profit-making still remains their main goal, by definition. Though they like to talk about triple bottom lines of financial, social, and environmental benefits, ultimately only one bottom line calls the shot: financial profit.
I always believed that poverty can be totally conquered in our own lifetimes if the right approach is adopted. I based my belief on the inherent ability of the poor that can be unleashed once they are given the opportunity to help themselves. This I have proved in action through my three decades of experience with Grameen Bank. The concept of microcredit did not exist before I initiated Grameen Bank in Bangladesh, which basically recognized that credit without collateral is a fundamental right of the poor. Our success with this in my own country has been widely replicated all over the world including in some of the richest countries; and the Nobel Peace Prize 2006 for Grameen Bank and myself is one recognition of that success. The story of Grameen Bank has been told in my earlier book: ‘Banker to the Poor’. In this new book I have described the further evolution of Grameen System. But more importantly I have introduced and elaborated here my broadened concept of social Business, that Grameen experience has led me into.
Grameen allowed the poor to be an actor in the free market and to enjoy some of its fruits to try to come out of poverty. It is fundamentally a business model, pure and simple, but a social Business. There can be other Social Business. They are just like any other business; but for social objectives and not for personal gain or dividend. I have tried to show in the book why Social Business can succeed in addressing social problems where other means mentioned above have failed. Social Business should not be confused with the term Social Enterprise which is used in a more encompassing sense and includes NGOs, personal initiatives, charities etc. and may include Social Business too.
Social Business introduces a totally revolutionary dimension to the free market economy. It does not interfere with the mechanism through which the normal Profit Making Business (PMB) works and prospers – capitalization, expert business management, competitiveness etc. – but investors here do not receive any dividend, though they can recover their investment if they want to, to reinvest in other Social Business or PMB. The satisfaction gained in achieving the social goals are the only motive behind the investment, and the business will be evaluated according to that standard. Essentially it is a non-loss, non-dividend business aimed at social objectives – education, health, environment, whatever is needed to address the problems faced by society. The profits here remain with the business and help it to grow further. The whole thing is based on the premise that entrepreneurs need not be motivated only by the profits they personally receive, but can also be motivated by social goals and may enjoy success there with equal satisfaction. The important thing is not to mix up a Social Business with a PMB. In fact the inclusion of Social Businesses alongside PMBs in the business world will give the free market capitalism a larger, nobler and a more fulfilling purpose. Its advantages over straightforward charity are many–efficiencies, continuous use with each turnover, competition with PMBs following the same rules, utilization of business innovations being some of the most important ones.
There can be two types of Social Business. Type one focuses on businesses dealing with social objectives only, as has just been mentioned. Type Two can take up any profitable business so long as it is owned by the poor and the disadvantaged, who can gain through receiving direct dividends or by some indirect benefits. There are various ways how the ownership can go to the poor. The two types can be mixed together in the same Social Business as has happened in the case of Grameen Bank. In a similar mixture of the two types, a socially beneficial rural toll road or bridge can be built by a company as a Social Business whose ownership will belong to the poor. On the other hand a huge project such as the Deep-Sea Mega Port in Bangladesh I have been advocating for, which will be used by several countries in the whole region and can potentially change the economic face of Bangladesh, can be built as a Social Business owned by the poor women of the country.
Is this an utopia? Will there be Social Businesses outside the realm of microcredit? Who will invest in such Social Businesses? I could answer these questions confidently in my new book, not only because I have faith in my idea and on the ability of the entrepreneurs to have social motives as well as profit making motives; but also because I am seeing this actually to happen at this very moment. I have devoted a good part of the book on the details of the first such Social Business we have started – Grameen-Danone Company which went into operation in early 2007. The idea of the company was born over just a casual lunch I had with Franck Riboud, the Chairman and CEO of Groupe Danone, a large French corporation – a world leader in diary products. It took just that time for me to convince him that an investment in a Social Business is a worthwhile thing for Danone shareholders. Even though it will not give any personal dividend to them, he agreed to the proposition even before I fully explained it to him. It took somewhat more time to fix up the modalities, the product (a fortified sweet yogurt for the poor malnourished children of Bangladesh at a price they can afford), the financing, tax and regulatory issues, new yard sticks for evaluating business and many other such details. And I have devoted many pages of the book on these details to show how all these things can be taken care of. The yogurt – ‘Shokti Doi’ (Energy Yogurt) is already in the market.
The Grameen System has invested in a second Social Business – this time an Eye Hospital where the poor can have eye treatment and cataract operations at a very low cost and all others in the small town and the villages around will have an excellent medical facility where there was not any like that before.
Social Business is a new concept and its practice is just beginning. As my book reveals, it has to make a lot more exploration while gaining more experience. There are challenges to be faced and solutions to be developed. For example, we had to invent a totally innovative marketing system to keep the market fragmented so that the low cost ‘Shokti Doi’ is reserved only for the poor children and does not disappear in the urban market for the well to do. I have also touched upon other issues such as how can the ownership of the Type Two Social Business be transferred to the poor, or how can the wonderful opportunities offered by IT be best deployed for the Social Business.
One thing is very clear to me – that with the Social Business taking off, the world of free market capitalism will never be the same again, and it then will really be able to deliver a deathblow on global poverty. I am sure, many business wizards and successful business personalities will apply their abilities to this new challenge – the challenge of creating a poverty-free world within a short time. At the moment we are seeing merely the line of horizon. Soon a good part of business genius, creativity and innovation of the world will devote itself to this new goal of social good. A whole new stock market with its new indices will thrive in the financial capitals of the world motivated by this new incentive. It will accelerate the process of poverty eradication to an unthinkable pace using the same market mechanism which accelerated the global prosperity for the rich in the first place.
Welcome to the new world of Social Business.
Muhammad Yunus
25 December 2007
Types of Social Businesses
Type I: focuses on businesses dealing with social objectives only.
Eg. The product produced is for the benefit of the poor.
Type II: can take up any profitable business so long as it is owned by the poor and the disadvantaged, who can gain through receiving direct dividends or by some indirect benefits.
Eg. The product could be produced by the poor but exported to an international market while net profits would go towards workers benefits.
Wikipedia: Social Business
From Kelley Robertson
Most people have read the Dr. Seuss tale "Green Eggs & Ham", either as kids or to their children. What is interesting is the relevance this story has to selling. Learn the secrets of Dr. Seuss's selling technique and build your sales.
"I am Sam. Sam I am. Do you like green eggs and ham? Would you like them here or there? Would you like them in a box, would you like them with a fox?"
3-Step Selling Technique From Dr. Seuss
1. Sam is selling a product and although his prospect is not initially interested, Sam doesn't let that deter him from asking.
2. Sam consistently offers the prospect a choice when trying to close the sale.
3. He refuses to give up. No matter how many times his prospect says "no", Sam keeps offering alternatives. He offers fourteen options before finally closing the sale.
I am not suggesting that you pester your customers but most people give up too early in the sales process. We hear a few "no's" and decide to turn our attention elsewhere. It is your responsibility as a business owner to ask the customer to make a decision - you cannot expect a customer to do the work for you.
If you have been effective in learning about their specific needs and presented the appropriate solution to your prospect then you have earned the right to ask them for the sale. Here are a few selling techniques that will help you reach this point:
Use Polite Persistence: Take a lesson from Sam and learn the importance of polite persistence. The most successful sales people ask for the sale seven or eight times and don't give up at the first sign of resistance. Research has shown that these individuals consistently earn more than their coworkers and peers.
Use these selling techniques and you are sure to win like Sam I Am.
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