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Business models with societal impact - It’s time to get SMEs involved.

Aktualisiert: Sept 10

It is unquestioned that our society is currently facing a number of unprecedented challenges.

These challenges require innovative solutions and a significant amount of resources. The following article aims to highlight and exemplify the enormous potential that lies in utilising business methods to tackle societal challenges. 

Luckily, the idea of social business is gaining more and more attention in today's business world. According to the German Start-up Monitor 2018, more than 38% of German start-ups consider themselves social start-ups. Among the extremely successful ones are…  

- Discovering Hands as a social enterprise that trains blind women to early detect breast cancer by utilising their exceptionally well-developed tactile sense. Discovering Hands and its economic value have been one of the cases for Ashoka’s and McKinsey's study “Multibillion-Euro Potential in Social Innovations”.

- Ecosia as an online search engine that invests business profits in reforestation projects around the globe. According to Ecosia’s website, the enterprise has to date been responsible for planting more than 70 million trees. 

- Africa GreenTec as a German social enterprise that develops, manufactures and operates mobile solar containers in rural Africa to supply the local communities with off-grid, reliable electricity.

- Soulbottles producing 100% plastic-free water bottles (made in Germany) and donating 1€ per sold bottle to projects that ensure the supply of clean drinking water where it is most needed.

A lot of similarly impactful solutions are listed with the Social Entrepreneurship Netzwerk Deutschland (SEND) and Ashoka. All of them show that it is not only feasible but also lucrative to do massive good by doing business.

But not only are more and more Startups founded with a clear mission to tackle social and environmental challenges. Together with Yunus Social Business, even large corporations have started setting up financially self-sustaining social business models that complement their core business. 

- The global player Danone has set up a social venture that tackles the issue of malnutrition among kids in Bangladesh by offering a highly nutritious yoghurt. 

- BASF developed highly effective low-cost mosquito nets to be sold to people in Bangladesh who are at risk of Malaria.

- Veolia, a large French company in the water and waste management industry, established Grameen Veolia Ltd. to supply rural Bangladesh communities with freshwater free from arsenic contamination.

- MAN, the truck and bus manufacturer has set up a programme to find innovative social business solutions that shape the future of mobility, logistics, and transport.

A group of businesses that has not been involved a whole lot in building ventures with social impact is SMEs. What would happen if we developed innovative ideas for social business models in the German Mittelstand and utilised its resources, expertise and structures to tackle some of our most pressing societal challenges?

SMEs traditionally have a strong connection to their local community and have always been involved in finding solutions to overcome societal issues. This goes back to the idea of the honourable merchant (Ehrbarer Kaufmann), developed in Europe in the 12th century. So, it is not a new idea to do business as a contribution to societal progress. And today’s CSR initiatives are attempts to fulfil that duty.

But building business models that move society forward goes beyond mere donation and sponsorship. It is a more structured and systemic approach to “contributing to society” and at the same time an approach with a better return on investments (both financially and socially).

Combining the power of social business with SMEs' proximity to the local communities would naturally make them more effective in understanding and solving local societal challenges.

This article sums up the main reasons why it pays off for businesses to start developing business models that benefit society as a whole.

If you are a leader in a family-owned business or SME, be brave and start tapping into the potential that social business models have for you and the world around you.

Get in touch if you are interested!

> Hier geht es zum Originalartikel


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