Last week, I had the opportunity to meet John Bird, the founder of The Big Issue which is a successful social business that is helping homeless people in the UK get out of poverty.  His talk inspired me to look into what makes this kind of business model successful in achieving social goals where many government and charitable efforts seem to fail.  Organisations in the social sector often suffer from a lack of funding resources and scale to meet the problems they are trying to address.  How can new business models be used to help them meet the social mission?

Social businesses like The Big Issue leverage a franchise business model to help people get started and participate in it’s growth.  The Big Issue is a magazine about popular culture and social issues sold on the streets of London and UK cities by street vendors who are homeless.   After an initial start up kit, these sellers buy the paper for 70p then sell it for £1.50 generating an 80p profit they can use to live on.  The business scales because it creates a small franchise, the homeless street vendor, who can buy and sell the magazine.  As each seller makes profit, more are interested in joining the business.  The Big Issue team helps them get started and encourages their business to grow.  As each new seller joins the programme there is very little incremental cost to The Big Issue organisation.  After the sellers make more profit, they are connected to a charity that provides services to re-house them and receive training on job skills to continue to move them out of poverty.  It works.  In the UK there are 2500 sellers and the magazine is read by 600,000 people each week.  And the business model has been franchised to 7 other countries around the world.

There are many social issues that need to be addressed today.  The big issue is scale.  As in business, successful models are those that allow for profitable partnerships to be built and grow.  Franchise business models are successful today in many private sector industries including retail, legal services, manufacturing, education, etc.  Applying the same franchise business model to issues that charities address today is a great way to create impact to help needy people in our society.  There are many examples of social businesses that apply the franchise business model, like the successful Grameen Bank’s Village Phone programme that helps women entrepreneurs get started or the MYC4 model that links borrowers and individual lenders.  The big issue in the social sector is how to create a model that scales by generating a sustainable profit and providing a franchise so that many can participate in the opportunity.