social contract business plan

• SUGGESTED TOPICS
• The Magazine
• Newsletters
• Managing Yourself
• Managing Teams
• Work-life Balance
• The Big Idea
• Data & Visuals
• Reading Lists
• Case Selections
• HBR Learning
• Topic Feeds
• Account Settings
• Email Preferences

For Great Teamwork, Start with a Social Contract

• Christine M. Riordan and Kevin O'Brien

To turn groups of employees into great teams, a powerful first step is to form a social contract — an explicit agreement that lays out the ground rules for team members’ behaviors. A contract can cover territory such as how members will work together, make decisions, communicate, share information, and support each other. Social contracts […]

To turn groups of employees into great teams, a powerful first step is to form a social contract — an explicit agreement that lays out the ground rules for team members’ behaviors. A contract can cover territory such as how members will work together, make decisions, communicate, share information, and support each other. Social contracts clearly outline norms for how members will and should interact with one another.

• CR Christine M. Riordan, PhD, is the dean and a professor of management at the Daniels College of Business, University of Denver. Kevin O’Brien, JD and LLM, is the chair of the Department of Business Ethics and Legal Studies in the Daniels College of Business at the University of Denver.

Partner Center

The Business Role in Creating a 21st-Century Social Contract

Wednesday june 24, 2020, aron cramer.

President and CEO

San Francisco

Aron is recognized globally as a preeminent authority on just and sustainable business. In addition to leading BSR, which has grown substantially throughout his tenure as President and CEO, Aron advises senior executives at BSR’s 300+ member companies and other global businesses and partners on the full spectrum of environmental, social, and governance issues.

Aron joined BSR in 1995 as the founding director of its Business and Human Rights program. He later opened BSR's Paris office in 2002, where he worked until becoming President and CEO in 2004. Aron has served on advisory boards to CEOs at AXA, Barrick Gold, Marks & Spencer, Nike, Recruit Holdings, SAP, Shell, and he serves as a director of the We Mean Business Coalition and RISE.

Aron speaks frequently at leading business and public fora and is widely quoted in top-tier media, such as the Financial Times , Le Figaro (France), The New York Times , The Wall Street Journal , Axios , and Politico . He is co-author of the book Sustainable Excellence: The Future of Business in a Fast-Changing World , which spotlights innovative sustainability strategies that enable business success.

Prior to joining BSR, Aron practiced law in San Francisco and worked as a journalist at ABC News in New York. He holds a BA from Tufts University and a JD from the University of California, Berkeley.

Dunstan Allison-Hope

Senior Advisor

Dunstan leads BSR’s work at the intersection of technology and human rights .

Previously, Dunstan led BSR’s information and communications technology , heavy manufacturing , and human rights teams.

He brings significant experience working on a diverse range of engagements and issues, including human rights due diligence, privacy and freedom of expression, sustainability reporting and strategy, and stakeholder engagement.

Dunstan facilitated the multistakeholder process of developing global principles on freedom of expression and privacy, which led to the launch of the Global Network Initiative in October 2008. He also helped create the Electronic Industry Citizenship Coalition, a collaborative initiative of more than 100 ICT companies improving conditions in their supply chains. Dunstan participated in the process of creating the Global Reporting Initiative G3 guidelines, and he is a regular commentator on issues of corporate accountability, reporting, and human rights. He also co-authored the 2010 book  Big Business, Big Responsibilities .

Prior to joining BSR in 2004, Dunstan was part of British Telecommunications' corporate responsibility team.

Dunstan has an M.Prof. in Sustainable Development from Forum for the Future.

Roger McElrath

Associate Director, Human Rights

Working with companies in the food and agriculture and oil industries, Roger advises on sustainability policies and programs in the areas of supply chain management, community development, stakeholder relations, reporting, and strategy.

He has worked with Tate & Lyle on code of conducts, Archer Daniels Midland on CSR strategy and supply chain management, and Threemile Canyon Farms on developing a sustainability vision and metrics.

Prior to joining BSR, Roger worked for the Wharton School, University of Pennsylvania, doing research and consulting on international and domestic labor issues for multinational corporations.

Roger holds an M.S. in International Affairs from George Washington University.

Katie Abbott

Former Manager, Inclusive Economy, BSR

Daniel Tam-Claiborne

Former Associate, BSR

About This Report

The social contract—the relationship between individuals and institutions—needs an overhaul.

Well before the urgent challenges of the COVID-19 pandemic and the long overdue focus on racial justice, diversity, equity, and inclusion changed history, it was clear that our social contracts were not fit for purpose.

For much of the second half of the 20 th century, the roles and responsibilities of business, government, civil society, and people remained relatively constant and provided vital protections to support healthy and productive lives. But today, people are relying on strained protection systems that fail to keep up with our 21 st -century realities. And there is increasing attention on the need to align the purpose of business with essential societal needs, such as the transition to a net-zero economy; a digital economy that sustains jobs, livelihoods, and economic fairness; and the advancement of diversity, equity, and inclusion.

It is more critical than ever that businesses in the 21 st century are focused on generating long-term value for all stakeholders and addressing the challenges we face, which will result in shared prosperity and sustainability for both business and society.

— Darren Walker , President of the Ford Foundation

More than 120 million middle-skill workers in Europe and the U.S. experienced declining employment and stagnating wages between 2000 and 2018.

37 percent of companies in the S&P 500 did not have a single Black board member in 2019.

Up to 65 million jobs and US$26 trillion in economic opportunities could be created by the transition to a net-zero GHG emissions economy by 2030.

The structural flaws in the social contract were already evident before 2020, and recent events have both revealed and accelerated those shortcomings in vivid ways that demand action. We now see more clearly the importance of the social safety net, functioning public health systems, and global collaboration. We see more clearly that the world remains too focused on short-term thinking, leaving us extraordinarily susceptible to shocks that create wide social and economic destruction, with the greatest impacts on the most marginalized groups. Recent events in the United States, are powerful reminders of how systemic and institutional racism continue to plague not only the U.S. but also the entire world, and they also reinforce the urgency of ensuring a social contract based on more inclusive models and practices. The rise of technologies to combat the health impacts of the coronavirus reminds us that privacy must be a core part of the development and applications of these promising tools.

We are at a hinge point in history where transformation is both possible and necessary. As we enter the decisive decade of the 2020s and aim to deliver on the Sustainable Development Goals and the Paris Agreement, it is imperative that business use its voice to act, enable, and influence, collaborating with governments, workers and their representatives, and civil society organizations to modernize the social contract. This paper outlines a framework for doing so.

A New Social Contract is Good for Business

Business has significant incentives to participate in the development of a new social contract.

• Shape the new role of business in society
• Create innovative business models, products and services
• Support and access a skilled workforce
• Respond to stakeholder expectations
• Thrive in a stable operating environment

I am convinced that we are entering a new era, in which companies will increasingly be judged by their overall impact on society and the environment. Companies that refuse to assume these responsibilities are doomed.

— Isabelle Kocher , Former CEO of ENGIE

64 percent of millennials consider a company’s social and environmental commitments when deciding where to work, and 64 percent will not take a job if a company doesn’t have strong corporate social responsibility values.

91 companies in the Fortune 500 effectively paid no federal income taxes on their 2018 U.S. income.

Only 30 percent of C-level executives are very confident that their organization is using workforce data in a highly responsible way.

Principles for Business Action to Modernize the Social Contract

This paper calls for ambitious business action to build a modern and stable pact between individuals and institutions.

Principle 1

Stakeholder Capitalism

Reorient business strategies to focus on long-term value creation based on a multi-stakeholder model.

• Align corporate strategy and key business decisions with long-term value creation for all stakeholders.
• Ensure that governance structures, including board and executive leadership, are inclusive, and consider the interests and perspectives of all.
• Design performance assessment, accountability systems, and external reporting to achieve and support long-term value creation.
• Pay fair share of taxes, report publicly on tax payments by jurisdiction, and ensure lobbying is consistent with fair tax policies.
• Reduce the earnings gap between executive and non-executive employees.
• Embed diversity, equity, and inclusion (DEI) across all aspects of business operations.
• Align policy advocacy, participation in industry associations, and monetary contributions with environmental and social objectives.

Principle 2

Skill Development and Career Pathways

Enable all workers to achieve sustainable livelihoods while also meeting workforce needs for companies to thrive and compete in a fast-changing economy.

• Create high-quality employment opportunities that support peoples’ livelihoods, resilient businesses, and healthy communities amidst deep structural change.
• Offer beneficial career pathways that meet current and future employment needs and attract, retain, and engage staff.
• Focus on DEI in hiring, training, and advancement to ensure that workforces reflect the entirety of society and that career pathways are accessible to all.
• Establish worker training programs that develop productive, adaptive, and agile workforces that boost competitiveness and innovation.
• Partner with educational institutions and skill-development programs to shape 21 st -century skills curricula aligned with emerging skills gaps and future labor market needs.

Principle 3

Economic Security and Mobility

Contribute to the strengthening and modernization of the social safety net to ensure and promote economic security and mobility.

• In response to the COVID-19 pandemic, call for social safety net reforms that address both broadly applicable needs and the specific, disproportionate impacts on marginalized communities.
• Advocate for a social safety net that enables all people to meet their basic needs.
• Advocate for social safety net provisions and labor law protections to be accessible to all workers, regardless of their employment status or job classification.
• Advocate for wage levels and related income programs that enable workers to support themselves and their families. In the absence of such laws, pay a living wage to all direct employees, and encourage contractors and suppliers to also pay their workers a living wage.
• Promote full and equitable access to social infrastructure (housing, education, transport, the legal system) and technology in support of widespread economic opportunity and vitality, with specific effort to ensure that access is available to traditionally marginalized communities in general and BIPOC in particular.

Principle 4

Just Transition to Net-Zero GHG Emissions

Create high-quality green job opportunities and support workers and communities in the transition to a net-zero greenhouse gas (GHG) emissions economy.

• Generate inclusive low-carbon employment opportunities, and manage the impacts on workers transitioning from high-carbon roles.
• Advocate for policies that enable the generation of high-quality low-carbon jobs and for those displaced from high-carbon roles to shift to new livelihoods.
• Work toward a just transition for people and communities through social dialogue and stakeholder engagement.

Principle 5

Worker Data Protection

Ensure that implementation of new technologies is aligned with international human rights standards and that data stewardship practices protect the privacy and nondiscrimination rights of workers.

• Undertake forward-looking assessments into the social, economic inclusion, and human rights impacts of disruptive technologies.
• Secure meaningful and informed employee consent for worker data collection.
• Use data analytics and digital tools to enhance the recruitment and management of healthy, diverse, and inclusive workplaces.
• Advocate for new international standards and guidance on privacy in the workplace for the digital era.

Let’s talk about how BSR can help you to transform your business and achieve your sustainability goals .

You Might Also Like

The Elephant in the Sustainability Room

Case Studies

Supporting business implementation of the ungc women’s empowerment principles.

Conducting a Double Materiality Assessment

The EU AI Act: 11 Recommendations for Business

Driving Forward Human Rights in Transport & Logistics

RISE: A Reflection on Women’s Advancement Beyond Supervisory Roles in the Garment Industry

Back to Reports

Social Contract Theories in Business

• Small Business
• Running a Business
• ')" data-event="social share" data-info="Pinterest" aria-label="Share on Pinterest">
• ')" data-event="social share" data-info="Reddit" aria-label="Share on Reddit">
• ')" data-event="social share" data-info="Flipboard" aria-label="Share on Flipboard">

What Is an Informal Business Contract?

Effect of sustainability on stakeholders, the concepts, evidence & implications of the stakeholder theory of a corporation.

• Role of Government in Business Ethics
• Laws for Governing the Social Responsibilities of Businesses

Social contract theory is an ancient philosophical idea that states that an individual's ethical and political obligations relate to an agreement he has with every other individual within a society. The agreement can be written, as in the form of laws, or it can be a tacit agreement, an unspoken or unwritten agreement of social norms and customs. In business, social contract theory includes the obligations that businesses of all sizes owe to the communities in which they operate and to the world as a whole. This involves corporate philanthropy, corporate social responsibility and corporate governance.

The Changing Business Climate

In 2012, McKinsey & Co. conducted a study of the changing face of businesses in the United States. The study found that 84 percent of corporate executives and small business owners believe society as a whole expects corporations to take an active role in social, political and environmental issues. Not only do consumers expect businesses to obey the law, but they also expect businesses to reinvest in their communities and to help struggling people and nonprofit organizations in meeting their needs.

Corporate Philanthropy

To answer the call for more involvement in the local community, businesses can draw on social contract theory to interact with society. While it is no secret that businesses must follow laws and regulations, they also must meet implicit non-legal expectations. These expectations are encompassed in the idea of corporate philanthropy, or do-gooding. Businesses can show that they are concerned with their communities and appreciative of the revenue streams the community provides by allocating resources for community projects, by volunteering in local charities or schools, by donating products and by running environmentally friendly ad campaigns. These things illustrate that a business is serious about its social contract and that it recognizes the value of giving back.

Corporate Social Responsibility

Corporate Social Responsibility is an idea closely related to corporate philanthropy but is focused more narrowly on creating sustainable and renewable business solutions. When a business employs a CSR strategy, it does so in response to the wants and needs of its stakeholders, including customers, employees and the public at large. CSR functions as an internal mechanism for ensuring that ethical standards in business are always followed to prevent the business from doing anything illegal, from violating the public's trust or from unnecessarily harming the environment. Small business owners often have a tighter control on the inflows and outflows of products and services so can better impact CSR.

Corporate Governance

An important concept of the social theory contract in business is follow-through, or making sure that the business is holding up its end of the bargain and not just paying lip service to the community. Corporate governance structures are policies that a company enacts to keep itself on an ethical and legal path. You can think of these structures as internal laws for the business. Corporate governance dictates the standards to which a company holds itself and the punishments that detractors from the standards incur. Corporate governance is therefore important for keeping corporate philanthropy, CSR and the overall social contract theory at the forefront of a business' strategy plan.

• The Economist: Business and Society - The Biggest Contract

Jeremy Bradley works in the fields of educational consultancy and business administration. He holds a Master of Business Administration degree.

Related Articles

What is a 3p triple bottom line company, pros & cons of the social contract approach to business, how organization theory of ethical and social responsibility affects the workplace, trends in contract management, what is corporate governance in strategic management, how can external social pressure influence business ethics, what is a corporate social audit, five dimensions of corporate social responsibility, the dominance theory of corporate power, most popular.

• 1 What Is a 3P Triple Bottom Line Company?
• 2 Pros & Cons of the Social Contract Approach to Business
• 3 How Organization Theory of Ethical and Social Responsibility Affects the Workplace
• 4 Trends in Contract Management

Building Great Teams: The Power of a Social Contract

• August 14, 2023
• Teamwork & Collaboration

Like a well-oiled machine, great teams operate smoothly and efficiently, achieving extraordinary outcomes. A crucial element in the construction of such teams is the establishment of a social contract. This contract serves as a set of guidelines that govern team members’ behaviors, decision-making processes, communication protocols, and expectations for mutual support. By creating clarity and purpose, promoting a positive and productive environment, enhancing collaboration, and facilitating continuous improvement, a social contract plays a pivotal role in effective team management. This article explores the importance, components, benefits, and strategies for implementing and maintaining a social contract within teams.

Table of Contents

Key Takeaways

• A social contract in team building establishes clear ground rules for team members’ behaviors and defines how members will work together.
• Implementing a social contract fosters team cohesion and shared purpose, helps address conflicts in a constructive manner, and creates an environment that supports individual and collective growth.
• Social contracts in effective team management provide clear expectations for behavior and conduct, guide decision-making processes, and align individual and team goals.
• Strategies for implementing and maintaining a social contract include involving all team members in the creation process, regularly reviewing and updating the contract, implementing accountability measures, and fostering a sense of ownership and commitment to the contract.

The Importance of a Social Contract in Team Building

The importance of a social contract in team building lies in its ability to establish clear ground rules for team members’ behaviors, define how members will work together, guide decision-making processes, set expectations for communication, and encourage information sharing and support. Building trust and establishing norms are key components of a social contract. By clearly outlining expectations for behavior and conduct, the social contract creates a foundation of trust among team members. It provides a framework for establishing norms that govern team interaction and decision-making. This helps to reduce conflicts and misunderstandings, promoting a positive and productive team environment. The social contract also enhances collaboration and cooperation among team members by emphasizing the importance of mutual support. Overall, the social contract plays a crucial role in team management by facilitating accountability, aligning individual and team goals, and supporting the development of trust and respect among team members.

The Content and Components of a Social Contract

One important aspect of a social contract is its content and components, which cover various aspects of team interaction and specify norms for behavior, conduct, decision-making, communication protocols, and the importance of mutual support. The content of a social contract establishes ground rules for team members’ behaviors, defines how members will work together, and guides decision-making processes. It also sets expectations for communication and encourages information sharing and support. By establishing norms and decision-making guidelines, a social contract creates a sense of clarity and purpose within the team. It promotes a positive and productive team environment, enhances collaboration and cooperation, reduces conflicts and misunderstandings, and improves overall team performance and outcomes. Additionally, a social contract provides a framework for effective team leadership, aligns individual and team goals, facilitates accountability and responsibility, supports the development of trust and respect among team members, and enables continuous improvement and adaptation. To implement and maintain a social contract, it is important to involve all team members in the creation process, regularly review and update the contract as needed, communicate it to all team members, encourage open dialogue and feedback, and hold team members accountable for adhering to the contract.

Benefits of Implementing a Social Contract in Teams

Implementing a social contract in teams offers advantages such as fostering clarity, promoting collaboration, reducing conflicts, enhancing performance, and supporting continuous improvement.

• Team cohesion: A social contract provides a framework for team members to align their goals, values, and behaviors, which fosters a sense of unity and shared purpose within the team.
• Conflict resolution: The establishment of clear guidelines for communication and decision-making in a social contract helps team members address conflicts in a constructive manner, leading to effective resolution and improved team dynamics.
• Enhanced performance: By setting expectations and norms for behavior and conduct, a social contract helps create an environment that supports individual and collective growth, leading to improved performance and outcomes.
• Continuous improvement: A social contract encourages open dialogue, feedback, and accountability, which enables teams to identify areas for improvement and adapt their processes and practices accordingly.

The Role of Social Contracts in Effective Team Management

A key aspect of effective team management involves utilizing a framework that establishes guidelines for behavior, decision-making, communication, and support among team members. One important framework that can support this is a social contract. A social contract helps in establishing trust and promoting accountability within the team. It provides a clear set of expectations for team members’ behavior and conduct, guides decision-making processes, and outlines communication protocols. By adhering to the social contract, team members are encouraged to be accountable for their actions and responsibilities. This promotes a sense of trust and respect among team members, facilitating effective collaboration and cooperation. The social contract also serves as a tool for team leaders to align individual and team goals, support continuous improvement and adaptation, and ensure that the team operates in a positive and productive environment.

Strategies for Implementing and Maintaining a Social Contract

To effectively implement and maintain a social contract, it is crucial to involve all team members in the creation process and regularly review and update the contract as needed. This ensures that the contract is a collective agreement that reflects the values and expectations of the entire team. In addition, involving all team members fosters a sense of ownership and commitment to the contract, promoting team cohesion. To further support the implementation and maintenance of the social contract, accountability measures should be put in place. These measures can include regular check-ins, progress assessments, and consequences for not adhering to the agreed-upon behaviors and guidelines. By actively involving team members and implementing accountability measures, the social contract becomes a powerful tool for building and maintaining a high-performing team.

Enhancing Collaboration and Communication Through Social Contracts

To enhance collaboration and communication within a team, social contracts play a crucial role. Building trust is essential in fostering a culture of trust through social contracts. By establishing ground rules and defining how team members will work together, social contracts promote open communication and create an environment where team members feel comfortable expressing their thoughts and ideas. These contracts also provide guidelines for decision-making processes and specify norms for behavior and conduct. By emphasizing the importance of mutual support and information sharing, social contracts encourage open dialogue and create a platform for effective communication. This enables teams to work together more efficiently and effectively, leading to improved collaboration and overall team performance. Therefore, implementing social contracts can greatly enhance collaboration and communication within teams.

The Impact of Social Contracts on Team Performance and Outcomes

The impact of implementing and maintaining social contracts on team performance and outcomes is significant, as they provide a framework for effective team leadership, align individual and team goals, facilitate accountability and responsibility, support the development of trust and respect among team members, and enable continuous improvement and adaptation.

• Measuring the effectiveness of social contracts
• Case studies on successful implementation of social contracts

Measuring the effectiveness of social contracts is important to assess their impact on team performance and outcomes. This can be done through various methods such as surveys, interviews, and performance evaluations. Case studies on successful implementation of social contracts can provide valuable insights into the benefits and challenges of using social contracts in different team settings. These case studies can highlight best practices, lessons learned, and strategies for maximizing the effectiveness of social contracts. By studying successful implementation cases, organizations can gain valuable knowledge and guidance for implementing and maintaining social contracts in their own teams.

Frequently Asked Questions

How does a social contract contribute to team member satisfaction and engagement.

A social contract contributes to team member satisfaction and engagement by fostering team collaboration and positively impacting team dynamics. It establishes clear expectations, promotes effective communication, and encourages mutual support, resulting in a more cohesive and motivated team.

Can a Social Contract Help in Resolving Conflicts Within a Team?

Can a social contract contribute to conflict resolution within a team? By establishing norms, guidelines, and expectations for behavior, a social contract promotes open communication, mutual respect, and accountability, all of which are essential for addressing and resolving conflicts in team dynamics.

How Does a Social Contract Promote Accountability and Responsibility Among Team Members?

A social contract promotes collaboration by fostering accountability and responsibility among team members. It establishes clear expectations and guidelines for behavior and conduct, ensuring that individuals are held responsible for their actions and contribute to the team’s goals.

What Are Some Common Challenges Teams May Face When Implementing and Maintaining a Social Contract?

Common challenges teams may face when implementing and maintaining a social contract include resistance to change, difficulty in enforcing accountability, lack of commitment from team members, and insufficient communication and collaboration in upholding the contract’s principles.

How Can a Social Contract Support the Development of Trust and Respect Among Team Members?

A social contract can support the development of trust and respect among team members by establishing clear expectations for behavior and conduct, promoting open communication, and fostering a sense of mutual support and collaboration. This contributes to building team cohesion and fostering positive team dynamics.

Brought to you by:

For Great Teamwork, Start with a Social Contract

By: Christine M Riordan and Kevin O'Brien

To turn groups of employees into great teams, a powerful first step is to form a social contract - an explicit agreement that lays out the ground rules for team members' behaviors. A contract can…

• Length: 779 word count
• Publication Date: Apr 17, 2012
• Discipline: General Management
• Product #: H008NH-PDF-ENG

What's included:

• Educator Copy

$4.50 per student

degree granting course

$7.95 per student

non-degree granting course

Get access to this material, plus much more with a free Educator Account:

• Access to world-famous HBS cases
• Up to 60% off materials for your students
• Resources for teaching online
• Tips and reviews from other Educators

Already registered? Sign in

• Student Registration
• Non-Academic Registration
• Included Materials

To turn groups of employees into great teams, a powerful first step is to form a social contract - an explicit agreement that lays out the ground rules for team members' behaviors. A contract can cover territory such as how members will work together, make decisions, communicate, share information, and support each other. Social contracts [...]

Apr 17, 2012

Discipline:

General Management

Harvard Business Review Digital Article

H008NH-PDF-ENG

779 word count

We use cookies to understand how you use our site and to improve your experience, including personalizing content. Learn More . By continuing to use our site, you accept our use of cookies and revised Privacy Policy .

Why we need a new social contract for the 21st century

In parts of the global south, social safety nets remain under construction. A new social contract fit for contemporary society would address this challenge Image:  Unsplash/Adli Wahid

.chakra .wef-1c7l3mo{-webkit-transition:all 0.15s ease-out;transition:all 0.15s ease-out;cursor:pointer;-webkit-text-decoration:none;text-decoration:none;outline:none;color:inherit;}.chakra .wef-1c7l3mo:hover,.chakra .wef-1c7l3mo[data-hover]{-webkit-text-decoration:underline;text-decoration:underline;}.chakra .wef-1c7l3mo:focus,.chakra .wef-1c7l3mo[data-focus]{box-shadow:0 0 0 3px rgba(168,203,251,0.5);} Aron Cramer

.chakra .wef-9dduvl{margin-top:16px;margin-bottom:16px;line-height:1.388;font-size:1.25rem;}@media screen and (min-width:56.5rem){.chakra .wef-9dduvl{font-size:1.125rem;}} Explore and monitor how .chakra .wef-15eoq1r{margin-top:16px;margin-bottom:16px;line-height:1.388;font-size:1.25rem;color:#F7DB5E;}@media screen and (min-width:56.5rem){.chakra .wef-15eoq1r{font-size:1.125rem;}} Social Justice is affecting economies, industries and global issues

.chakra .wef-1nk5u5d{margin-top:16px;margin-bottom:16px;line-height:1.388;color:#2846F8;font-size:1.25rem;}@media screen and (min-width:56.5rem){.chakra .wef-1nk5u5d{font-size:1.125rem;}} Get involved with our crowdsourced digital platform to deliver impact at scale

Stay up to date:, social justice.

Listen to the article

• The social contract on which society is based originated in the post-war era and is no longer fit for purpose.
• New social contracts could help bring about a more equitable prosperity.
• These new social contracts should be based on key principles including stakeholder capitalism, skill development, economic security and a transition to net zero.

A social contract is a real or hypothetical agreement between a government and its people setting out the rights and duties of each. The social contracts on which society is currently based largely emerged in the post-war era, and are no longer fit for purpose. As we consider the impact and lessons from COVID, new social contracts could help bring about more equitable prosperity.

In the global north, social contracts in many nations were formulated for a mid-20 th century world that no longer exists. Lifetime employment, fixed benefit pension plans, and the traditional nuclear family have all faded, just as lifespans have expanded. In many parts of the global south, social safety nets remain under construction, despite the growth of vibrant emerging economies and societies, leaving the social contract in many countries incomplete.

Have you read?

Social entrepreneurs have improved 622 million lives in 2 decades.

A social contract fit for contemporary society should address three fundamental challenges. First, familiar elements of the safety net, such as social insurance and pension benefits, need to address a new set of circumstances, such as the need for people to reskill during much longer working lives. Second, social contracts must be relevant in a world being reshaped by technological revolutions, and the transition to a clean energy economy. Third, a modern social contract must tackle the inequality and exclusion that plague societies in all corners of the world.

Modern social contracts should be based on five core principles:

1. Stakeholder capitalism

Market rules are badly in need of reform. The old rules have promoted short-term thinking that has allowed inequality to proliferate, and incentivized rampant consumption of natural resources. We must build on the momentum in reforming reporting and disclosure rules, including the establishment of the International Sustainability Standards Board and the Task Force for Climate-Related Financial Disclosures as well as other measures, including those embraced by the World Economic Forum’s International Business Council. Businesses must lead by example by addressing the growing gap between executive compensation and the average worker: in 2018, CEOs in the US took home more than 250 times the pay of an average worker ; in several European countries, the multiple exceeded 150 times. These disparities have undermined trust in the market economy.

2. Skill development and career pathways

Our social contracts remain focused on a career and work model with three separate and clear sequences: education, work, and retirement. This no longer reflects either peoples’ needs or objectives. A greater proportion of today's 5-year-olds may live to the age of 100 , which will require a major redesign of working life. The new contract defining the world of work should allow companies the flexibility to reshape their workforces to enable innovation and new hybrid ways of working, and enable workers the flexibility to access career breaks and training that will help them thrive in a changing world.

3. Economic security and mobility

The last two years have shown how fragile social safety nets are in many countries. This was the case been long before COVID-19 emerged. Economic mobility has declined in many countries ; in the US, only 8% of children raised in the bottom 20% of income distribution are able to climb to the top 20% as adults, while the figure in Denmark is nearly double at 15%. There are exceptions, as noted in the World Economic Forum’s Social Mobility Index , notably in the Nordic countries. A new social contract needs to re-establish social and economic mobility and security.

4. A just and inclusive transition to net zero

Climate justice and the just transition were recurrent discussion items at COP26. A new social contract must face this head on, meeting the needs of both those disproportionately harmed by the current energy system, and also those who face displacement in the transition. This means providing assistance for the displaced, investments to ensure that clean energy is accessible and affordable for all, and urgent action to improve public and environmental health affected by dirty energy.

5. Responsible use of technology

The rise of disinformation threatens the individual privacy and democratic processes on which functioning societies depend. A recent study found that roughly half of US adults (48%) now say the government should take steps to restrict false information, even if it means losing some freedom to access and publish content. What’s more, there is considerable evidence that the flaws in the information ecosystem disproportionately impact the most vulnerable, especially the young and the economically dispossessed. Governments have struggled to move as quickly as the pace of innovation, and would do well to expand their expertise, and create special-purpose entities to find policy solutions.

None of this can or should be delivered by any single sector, nor by any single model. Governments have the essential role in shaping a new social contract. Business has much to gain by helping ensure that market economies retain the license to operate. Civil society has a more prominent role than it had in the middle of the last century. Collaboration is essential, and all must play a role.

The benefits of a new approach are compelling. Modern social contracts can facilitate economic opportunities and mobility for all; secure the societal consensus needed for a decisive approach to the climate crisis; enable technological innovation in service of social progress, and foster more inclusive societies.

Don't miss any update on this topic

Create a free account and access your personalized content collection with our latest publications and analyses.

License and Republishing

World Economic Forum articles may be republished in accordance with the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International Public License, and in accordance with our Terms of Use.

The views expressed in this article are those of the author alone and not the World Economic Forum.

Related topics:

The agenda .chakra .wef-n7bacu{margin-top:16px;margin-bottom:16px;line-height:1.388;font-weight:400;} weekly.

A weekly update of the most important issues driving the global agenda

.chakra .wef-1dtnjt5{display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-align-items:center;-webkit-box-align:center;-ms-flex-align:center;align-items:center;-webkit-flex-wrap:wrap;-ms-flex-wrap:wrap;flex-wrap:wrap;} More on Forum Institutional .chakra .wef-nr1rr4{display:-webkit-inline-box;display:-webkit-inline-flex;display:-ms-inline-flexbox;display:inline-flex;white-space:normal;vertical-align:middle;text-transform:uppercase;font-size:0.75rem;border-radius:0.25rem;font-weight:700;-webkit-align-items:center;-webkit-box-align:center;-ms-flex-align:center;align-items:center;line-height:1.2;-webkit-letter-spacing:1.25px;-moz-letter-spacing:1.25px;-ms-letter-spacing:1.25px;letter-spacing:1.25px;background:none;padding:0px;color:#B3B3B3;-webkit-box-decoration-break:clone;box-decoration-break:clone;-webkit-box-decoration-break:clone;}@media screen and (min-width:37.5rem){.chakra .wef-nr1rr4{font-size:0.875rem;}}@media screen and (min-width:56.5rem){.chakra .wef-nr1rr4{font-size:1rem;}} See all

Institutional update

World Economic Forum

May 21, 2024

Reflections from MENA at the #SpecialMeeting24

Maroun Kairouz

May 3, 2024

Day 2 #SpecialMeeting24: Key insights and what to know

Gayle Markovitz

April 28, 2024

Day 1 #SpecialMeeting24: Key insights and what just happened

April 27, 2024

#SpecialMeeting24: What to know about the programme and who's coming

Mirek Dušek and Maroun Kairouz

Climate finance: What are debt-for-nature swaps and how can they help countries?

Kate Whiting

April 26, 2024

Want to create or adapt books like this? Learn more about how Pressbooks supports open publishing practices.

Part 3: Ethical Duties

41 What is “social contract theory”?

Our final ethical framework is social contract theory. This is based more heavily on political theory than our other frameworks, and begins by considering the role of government. People who do not see the need for public goods, [1] (including laws, court systems, and the government goods and services just cited) often question why there needs to be a government at all. One response might be, “Without government, there would be no corporations.” Thomas Hobbes believed that people in a “state of nature” would rationally choose to have some form of government. He called this the social contract . Hobbes and Locke are generally regarded as the preeminent social contract theorists.  In your own lives and in this course, you will see an ongoing balancing act between human desires for freedom and human desires for order; it is an ancient tension. Some commentators also see a kind of social contract between corporations and society; in exchange for perpetual duration and limited liability, the corporation has some corresponding duties toward society. Also, if a corporation is legally a “person,” as the Supreme Court reaffirmed in 2010, then some would argue that if this corporate person commits three felonies, it should be locked up for life and its corporate charter revoked!

Modern social contract theorists, such as Thomas Donaldson and Thomas Dunfee ( Ties that Bind , 1999), observe that various communities, not just nations, make rules for the common good. Your college or school is a community, and there are communities within the school (fraternities, sororities, etc) that have rules, norms, or standards that people can buy into or not. If not, they can exit from that community, just as we are free (though not without cost) to reject US citizenship and take up residence in another country.

Donaldson and Dunfee’s integrative social contracts theory stresses the importance of studying the rules of smaller communities along with the larger social contracts made in states (such as Colorado or California) and nation-states (such as the United States or Germany). Our Constitution can be seen as a fundamental social contract.

It is important to realize that a social contract can be changed by the participants in a community, just as the US Constitution can be amended. Social contract theory is thus dynamic—it allows for structural and organic changes. Ideally, the social contract struck by citizens and the government allows for certain fundamental rights such as those we enjoy in the United States, but it need not. People can give up freedom-oriented rights (such as the right of free speech or the right to be free of unreasonable searches and seizures) to secure order (freedom from fear, freedom from terrorism). Thus the rights that people have—in positive law—come from whatever social contract exists in the society. This view differs from that of the deontologists and that of the natural-law thinkers such as Gandhi, Jesus, or Martin Luther King Jr., who believed that rights come from God or, in less religious terms, from some transcendent moral order.

The relationship between rights and duties—in both law and ethics—calls for some explanations:

• If you have a right of free expression, the government has a duty to respect that right but can put reasonable limits on it. For example, you can legally say whatever you want about the US president, but you can’t get away with threatening the president’s life. Even if your criticisms are strong and insistent, you have the right (and our government has the duty to protect your right) to speak freely. In Singapore during the 1990s, even indirect criticisms—mere hints—of the political leadership were enough to land you in jail or at least silence you with a libel suit.
• Rights and duties exist not only between people and their governments but also between individuals. Your right to be free from physical assault is protected by the law in most states, and when someone walks up to you and punches you in the nose, your rights—as set forth in the positive law of your state—have been violated. Thus other people have a duty to respect your rights and to not punch you in the nose.
• Your right in legal terms is only as good as your society’s willingness to provide legal remedies through the courts and political institutions of society.

A distinction between basic rights and nonbasic rights may also be important. Basic rights may include such fundamental elements as food, water, shelter, and physical safety. Another distinction is between positive rights (the right to bear arms, the right to vote, the right of privacy) and negative rights (the right to be free from unreasonable searches and seizures, the right to be free of cruel or unusual punishments). Yet another is between economic or social rights (adequate food, work, and environment) and political or civic rights (the right to vote, the right to equal protection of the laws, the right to due process).

To apply social contract theory, it can be helpful to consider oneself behind a “veil of ignorance” in which one does not know which of the parties affected by a decision one will be in the future. For example, if one didn’t know whether one were a board member, employee, shareholder, or customer, what decision would be made? Thinking through a veil of ignorance forces us to consider whether we would like the outcome on any one of these groups.

This thought process has several implications: first, rules for cooperation should benefit more than just some, otherwise nobody behind a veil of ignorance would agree! Thus, slavery is immediately unethical, because nobody who might become enslaved would agree to the system ahead of time. Second, if another breaks the social contract, it may be justified in turn. For example, if someone attacks you, self-defense (attacking in return for defensive purposes) may be justified. Third, legal rules become important, because they maintain the social contract. Of course, an unjust law may violate a social contract itself!

For more, see this video from “Crash Course Philosophy”:

• Consider the form of government in the United States. What are the essential elements of this large “social contract”?
• Goods that are useful to society (parks, education, national defense, highways) that would ordinarily not be produced by private enterprise. Public goods require public revenues (taxes) and political support to be adequately maintained. ↵

The idea that people in a civil society have voluntarily given up some of their freedoms to have ordered liberty with the assistance of a government that will support that liberty.

Business Ethics: 100 Questions Copyright © by Jeff Lingwall is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License , except where otherwise noted.

Social Enterprise Business Plan Template

Written by Dave Lavinsky

Social Enterprise Business Plan

You’ve come to the right place to create your Social Enterprise business plan.

We have helped over 1,000 entrepreneurs and business owners create business plans and many have used them to start or grow their Social Enterprise businesses.

Below is a template to help you create each section of your Social Enterprise business plan.

Executive Summary

Business overview.

EmpowerU is a startup social enterprise located in Ogden, Utah. The business was founded by Matt and Lauren Goodwin, a couple who have personally placed over three hundred job seekers into viable positions of employment over the past ten years by working in a nationally-known employment agency group. Both Matt and Lauren secured thousands of dollars for their employer, who received a payment for every person successfully placed into employment. With outstanding reviews by employers and a large following of those who have been placed by Matt and Lauren, they’ve determined that they can give back to the city of Ogden by opening their social enterprise, EmpowerU.

EmpowerU will provide a full-service employment placement agenda, from the time they first receive a new applicant to the 6-month period after employment when the employer-employee review is completed. Each step of the interview preparation, interviewing process, and employment negotiation is focused on bringing a new employee into a personally upward bound position that will change their life for the better.

Product Offering

The following are the services that EmpowerU will provide for the potential employers:

• Extensive recruitment of job candidates to fulfill employer requests
• Pre-employment training
• Employment assistance in pay package negotiation
• Reasonable on-hire rates with sliding scale of percentages
• Monthly and yearly reviews and assessments of employee to service employer

The following are the services that EmpowerU will provide for the potential employees:

• Personal training leading to interviews and employment
• Testing to determine skills, abilities, temperament-style
• Resume construction
• Personal deportment training
• Interview techniques for a “win”
• Negotiation techniques for employment
• Personal management in an organization
• Time management skills
• After-hire review and further training, if required
• One-year assessment

Customer Focus

EmpowerU will target both potential employers and candidates as potential employees. To do so, they will target medium-to-large businesses within the Ogden area and residents within the Ogden area. EmpowerU will target human resource managers within the Ogden area. EmpowerU will also target community associations and governmental agencies with job training programs.

Management Team

EmpowerU will be co-owned and operated by Matt and Lauren Goodwin. They have recruited their former administrative assistants, Austin Maven, and Jeanie Parker, to help manage the office and operations of EmpowerU.

Matt Goodwin is a graduate of the University of Utah with a Bachelor’s degree in Business Management. Lauren Goodwin is a graduate of Utah State College, where she earned an Associate’s degree in Social Sciences. Matt and Lauren have been working at an Ogden-based employment recruiter agency for the past ten years. During that time, they observed and practiced the functions of candidate placement into employment positions. They successfully placed over three hundred job-seekers into employment. They now want to help job candidates who need a “hand up” in securing employment by using all their acquired skills to make a change for the good of the city and state.

Austin Maven will become the Office Manager and will oversee all day-to-day office functions. He will manage the accounting and payroll for the social enterprise, as well as the detailed requirements needed to satisfy the social enterprise financials.

Jeanie Parker will become the Operations Manager, assisting in the movement of people resources in and out of the business and overseeing the training and assistance programs.

Success Factors

EmpowerU will be able to achieve success by offering the following competitive advantages:

• Friendly, knowledgeable, and highly-qualified team of EmpowerU
• Comprehensive menu of services that benefit both the employers and the job candidates.
• Full support and training for potential employees
• Reviews and assessments of employee during monthly and yearly visits
• As a social enterprise, EmpowerU charges extremely reasonable rates for employee placement, making them the lowest-priced employment service in Ogden.

Financial Highlights

EmpowerU is seeking $200,000 in debt financing to launch its social enterprise business. The funding will be dedicated toward securing the office space and purchasing office equipment and supplies. Funding will also be dedicated toward three months of overhead costs to include payroll of the staff, rent, and marketing costs for the print ads and marketing costs. The breakout of the funding is below:

• Office space build-out: $20,000
• Office equipment, supplies, and materials: $10,000
• Three months of overhead expenses (payroll, rent, utilities): $150,000
• Marketing costs: $10,000
• Working capital: $10,000

The following graph outlines the financial projections for EmpowerU.

Company Overview

Who is empoweru.

EmpowerU is a newly established, full-service job training and placement agency in Ogden, Utah. EmpowerU will be the most reliable, cost-effective, and effective choice for employers in Ogden and the surrounding communities who seek employees who are eager to establish a better personal life for themselves. EmpowerU will provide a comprehensive menu of job training, placement and review services for any job candidate and business to utilize. Their full-service approach includes a comprehensive array of services that benefit both the job candidate and hiring company.

  EmpowerU will be able to provide job candidates for a wide spectrum of potential employers. The team of professionals are highly qualified and experienced in employee placements and training and reviews of those employees. EmpowerU removes all headaches and issues of seeking qualified personnel and ensures all issues are taken care of expeditiously, while delivering the best customer service.

EmpowerU History

EmpowerU is owned and operated by Matt and Lauren Goodwin. Together, they have personally placed over three hundred job seekers into viable positions of employment over the past ten years by working in a nationally-known employment agency group. Both Matt and Lauren secured thousands of dollars for their employer, who received a payment for every person successfully placed into employment. With outstanding reviews by employers and a large following of those who have been placed by Matt and Lauren, they’ve determined that they can give back to the city of Ogden by opening their social enterprise, EmpowerU.

Since incorporation, EmpowerU has achieved the following milestones:

• Registered EmpowerU, LLC to transact business in the state of Utah.
• Have a contract in place for a 10,000 square foot office in a prime downtown building location.
• Have reached out to numerous former associates and people they placed to include EmpowerU any time they search for new employees.
• Began recruiting a staff of three and two office personnel to work at EmpowerU.

EmpowerU Services

Industry analysis.

The social enterprise industry is expected to grow over the next five years to over $1 billion. The growth will be driven by an increased recognition of the need to assist in improving the lives of others within the world. The growth will be driven by an increased desire to serve the world by using talents and time to build social enterprise businesses. The growth will be driven by the popularity of including a “social awareness” facet within corporate mission statements. Costs will likely be reduced as social enterprises seek to reduce profits and increase services. Costs will likely be reduced as businesses increase voluntary funding for social enterprises.

Customer Analysis

Demographic profile of target market, customer segmentation.

EmpowerU will primarily target the following customer profiles:

• Medium-to-large businesses
• Residents of Ogden
• Human resource managers
• Community associations
• Governmental agencies

Competitive Analysis

Direct and indirect competitors.

EmpowerU will face competition from other companies with similar business profiles. A description of each competitor company is below.

Home Companion Care Services

Home Companion Care Services is a full-service placement agency of caregivers. The primary target market consists of elderly individuals who require in-home care and people with disabilities who need assistance with daily activities. Home Companion Care Services also engages with families seeking compassionate support for their loved ones. While services are not medically related, services may include medication reminders, running errands, purchasing and preparing food, bathing and personal grooming and other essentials for daily living.

Home Companion Care Services was started by Liam Gallagher, who saw a gap in the employment of caregivers when his mother required a caregiver and the availability for one was extremely limited. He also noted that most caregivers were not paid enough to make their lives sustainable. With this in mind, he started Home Companion Care Services as a social enterprise to invest in making the lives of the elderly and disabled better, as well as the lives of the caregivers enriched. With these positives at the forefront, Home Companion Care Services was started six years ago and continues to build momentum at this time. Fees for placement of caregivers is modest and reasonable in comparison to competitors.

Heads-Up Auto Repair

Heads-Up Auto Repair was started in 2020 by Neil Patterson, the owner of an auto repair chain in Utah. When Neil noted that several viable auto repairmen did not have employment due to former prison records, he started the social enterprise, “Heads-Up Auto Repair,” as a way to enrich the lives of these qualified repairmen, while earning a profit that would enrich their lives. The program for job training contains the phrase, “Heads Up,” as in “holding one’s head up high with pride in one’s work and the completion of that work successfully”.

Heads-Up Auto Repair serves customers throughout the state of Utah, where location managers are specially trained to assist repairmen in various aspects of customer service, team-bonding, personal skills and education, English-as-a-second-language training, and other services that increase the likelihood of the individuals continuing to excel in both the repair services they provide, but with an increased confidence in their lives overall, as well.

Animals Gone Wild

Animals Gone Wild is a wildlife viewing business that is a social enterprise located thirty miles from Ogden, Utah. Animals Gone Wild was started in 2010 by Amber Stenson, who determined that wild animals should live in the wild, even if their lives started in an enclosed zoo exhibit or other enclosed experience. Amber began a fundraising campaign to build and maintain the wild existence arenas for several wild animals, encouraging volunteers to serve the animals with her throughout their lives. Animals Gone Wild charges a fee for visitors to ride a trolley through the “villages” where various species of wild animals live. Payments by visitors covers the costs of caring for and feeding the animals, while fundraiser campaigns pay for the structures, buildings and care of the Animals Gone Wild structural needs.

Competitive Advantage

EmpowerU will be able to offer the following advantages over their competition:

• Comprehensive menu of services that benefit both the employers and the job candidates
• As a social enterprise, EmpowerU charges extremely reasonable rates for employee placement, making them the lowest-priced employment service in Ogden

Marketing Plan

Brand & value proposition.

EmpowerU will offer the unique value proposition to its clientele:

• Highly-qualified team of skilled employees who are able to provide a comprehensive array of services benefiting employers, employees, and the greater Ogden population
• Intensive training and preparation for job candidates, far beyond those of competitors
• Unique reviews and assessments of employees during monthly and yearly visits

Promotions Strategy

The promotions strategy for EmpowerU is as follows:

Word of Mouth/Referrals

EmpowerU has built up an extensive list of contacts over the years by providing exceptional service and expertise to their clients and personal associates. Several former employer clients will follow the Goodwins in their new social enterprise to secure employees and will refer EmpowerU to their associates.

Professional Associations and Networking

EmpowerU will extensively target the professional associations and governmental agencies within the city of Odgen to inform and invite potential employers to seek qualified employees through EmpowerU.

Social Media Outreach

Through several social media channels, prospective employees with a wide variety of skills will be invited to reach out to EmpowerU for job training and placement. Invitations via social media will also invite employers of private companies and governmental agencies, particularly human resources managers, to engage with EmpowerU to place employees into advantageous roles.

Website/SEO Marketing

EmpowerU will fully utilize their website. The website will be well organized, informative, and list all the services that EmpowerU provides. The website will also list their contact information and offer an online reservation system for potential employees who would like to talk with or visit the EmpowerU offices. The website will engage SEO marketing tactics so that anytime someone types in the Google or Bing search engine “job recruitment company” or “employment agency near me”, EmpowerU will be listed at the top of the search results.

The pricing of EmpowerU will be moderate and below competitors so employer clients will feel they receive excellent value when engaging new hires as a result of their services.

Operations Plan

The following will be the operations plan for EmpowerU. Operation Functions:

• Matt Goodwin will be the co-owner and President of the company. He will oversee all employer client relations.
• Lauren Goodwin will be the co-owner and Vice President of the company. She will oversee the recruiting of potential job candidates.

Milestones:

EmpowerU will have the following milestones completed in the next six months.

• 5/1/202X – Finalize contract to lease office space
• 5/15/202X – Finalize personnel and staff employment contracts
• 6/1/202X – Finalize employment contracts for EmpowerU clients
• 6/15/202X – Begin networking at industry events
• 6/22/202X – Begin moving into EmpowerU office
• 7/1/202X – EmpowerU opens its office for business

Financial Plan

Key revenue & costs.

The revenue drivers for EmpowerU are the fees they will charge to employer clients for their employee placement services.

The cost drivers will be the overhead costs required in order to staff EmpowerU. The expenses will be the payroll cost, rent, utilities, office supplies, and marketing materials.

Funding Requirements and Use of Funds

EmpowerU is seeking $200,000 in debt financing to launch its social enterprise. The funding will be dedicated toward securing the office space and purchasing office equipment and supplies. Funding will also be dedicated toward three months of overhead costs to include payroll of the staff, rent, and marketing costs for the print ads and association memberships. The breakout of the funding is below:

Key Assumptions

The following outlines the key assumptions required in order to achieve the revenue and cost numbers in the financials and in order to pay off the startup business loan.

• Number of Employer Clients Per Month: 30
• Average Revenue per Month: $60,000
• Office Lease per Year: $100,000

Financial Projections

Income statement, balance sheet, cash flow statement, social enterprise business plan faqs, what is a social enterprise business plan.

A social enterprise business plan is a plan to start and/or grow your social enterprise business. Among other things, it outlines your business concept, identifies your target customers, presents your marketing plan and details your financial projections.

You can easily complete your Social Enterprise business plan using our Social Enterprise Business Plan Template here .

What are the Main Types of Social Enterprise Businesses? 

There are a number of different kinds of social enterprise businesses , some examples include: Trading social enterprise, Financial social enterprise, and Non-governmental organizations (NGOs) and charity social enterprise.

How Do You Get Funding for Your Social Enterprise Business Plan?

Social Enterprise businesses are often funded through small business loans. Personal savings, credit card financing and angel investors are also popular forms of funding.

What are the Steps To Start a Social Enterprise Business?

Starting a social enterprise business can be an exciting endeavor. Having a clear roadmap of the steps to start a business will help you stay focused on your goals and get started faster.

1. Develop A Social Enterprise Business Plan - The first step in starting a business is to create a detailed social enterprise business plan that outlines all aspects of the venture. This should include potential market size and target customers, the services or products you will offer, pricing strategies and a detailed financial forecast. 

2. Choose Your Legal Structure - It's important to select an appropriate legal entity for your social enterprise business. This could be a limited liability company (LLC), corporation, partnership, or sole proprietorship. Each type has its own benefits and drawbacks so it’s important to do research and choose wisely so that your social enterprise business is in compliance with local laws.

3. Register Your Social Enterprise Business - Once you have chosen a legal structure, the next step is to register your social enterprise business with the government or state where you’re operating from. This includes obtaining licenses and permits as required by federal, state, and local laws.

4. Identify Financing Options - It’s likely that you’ll need some capital to start your social enterprise business, so take some time to identify what financing options are available such as bank loans, investor funding, grants, or crowdfunding platforms.

5. Choose a Location - Whether you plan on operating out of a physical location or not, you should always have an idea of where you’ll be based should it become necessary in the future as well as what kind of space would be suitable for your operations.

6. Hire Employees - There are several ways to find qualified employees including job boards like LinkedIn or Indeed as well as hiring agencies if needed – depending on what type of employees you need it might also be more effective to reach out directly through networking events.

7. Acquire Necessary Social Enterprise Equipment & Supplies - In order to start your social enterprise business, you'll need to purchase all of the necessary equipment and supplies to run a successful operation. 

8. Market & Promote Your Business - Once you have all the necessary pieces in place, it’s time to start promoting and marketing your social enterprise business. This includes creating a website, utilizing social media platforms like Facebook or Twitter, and having an effective Search Engine Optimization (SEO) strategy. You should also consider traditional marketing techniques such as radio or print advertising.

McCombs School of Business

• Español ( Spanish )

Videos Concepts Unwrapped View All 36 short illustrated videos explain behavioral ethics concepts and basic ethics principles. Concepts Unwrapped: Sports Edition View All 10 short videos introduce athletes to behavioral ethics concepts. Ethics Defined (Glossary) View All 58 animated videos - 1 to 2 minutes each - define key ethics terms and concepts. Ethics in Focus View All One-of-a-kind videos highlight the ethical aspects of current and historical subjects. Giving Voice To Values View All Eight short videos present the 7 principles of values-driven leadership from Gentile's Giving Voice to Values. In It To Win View All A documentary and six short videos reveal the behavioral ethics biases in super-lobbyist Jack Abramoff's story. Scandals Illustrated View All 30 videos - one minute each - introduce newsworthy scandals with ethical insights and case studies. Video Series

Ethics Defined UT Star Icon

Social Contract Theory

Social Contract Theory is the idea that society exists because of an implicitly agreed-to set of standards that provide moral and political rules of behavior.

Social contract theory says that people live together in society in accordance with an agreement that establishes moral and political rules of behavior. Some people believe that if we live according to a social contract, we can live morally by our own choice and not because a divine being requires it.

Over the centuries, philosophers as far back as Socrates have tried to describe the ideal social contract, and to explain how existing social contracts have evolved. Philosopher Stuart Rachels suggests that morality is the set of rules governing behavior that rational people accept, on the condition that others accept them too.

Social contracts can be explicit, such as laws, or implicit, such as raising one’s hand in class to speak. The U.S. Constitution is often cited as an explicit example of part of America’s social contract.  It sets out what the government can and cannot do. People who choose to live in America agree to be governed by the moral and political obligations outlined in the Constitution’s social contract.

Indeed, regardless of whether social contracts are explicit or implicit, they provide a valuable framework for harmony in society.

Related Terms

Justice is a complicated concept that at its core requires fairness.

Morals are society’s accepted principles of right conduct that enable people to live cooperatively.

Prosocial Behavior

Prosocial Behavior occurs when people voluntarily help others.

Veil of Ignorance

The Veil of Ignorance is a device for helping people more fairly envision a fair society by pretending that they are ignorant of their personal circumstances.

Stay Informed

Support our work.

Society, Business Values, and the Social Contract

• First Online: 04 August 2017

Cite this chapter

• Diane L. Swanson 2  

4 Citations

By examining decades of social contract reasoning in the business and society field, this chapter highlights the society aspect of the book’s 3S approach. This examination shows that the field has whittled away at the separation between business and society by presenting these sectors as interpenetrating value systems. The trajectory of this research leads Swanson to conclude that business has institutional legitimacy if it provides its stakeholders with value-defined economic, social, and environmental benefits. Her integrative model of corporate social performance illustrates that socially responsible executives seek to discover how to activate the organizational values that make such triple bottom line impacts possible. Accordingly, amoral management can be understood as a fallacy of separation consciousness that partitions facts from values in decision making. Conversely, the social contract calls for enlightened executives to understand that values define the symbiotic relationship between business and society and that value-free decisions do not exist.

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

• Available as EPUB and PDF
• Read on any device
• Instant download
• Own it forever
• Compact, lightweight edition
• Dispatched in 3 to 5 business days
• Free shipping worldwide - see info
• Durable hardcover edition

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

Abrams, F. (1951). Management’s responsibilities in a complex world. Harvard Business Review, 29 , 29–34.

Google Scholar  

Ackerman, R. W., & Bauer, R. A. (1976). Corporate social responsiveness: The modern dilemma . Cambridge, MA: Harvard University Press.

Agle, B., & Caldwell, C. B. (1999). Understanding research on values in business: A level of analysis framework. Business & Society, 38 , 326–387.

Article   Google Scholar  

Alexander, G. J., & Buchholz, R. A. (1978). Corporate social responsibility and stock market performance. Academy of Management Journal, 21 , 479–486.

Alhaddi, H. (2015). Triple bottom line: A look at talent acquisition and employee engagement using grounded theory. Management and Organizational Studies, 2 , 25–32.

Altman, B. W., & Vidaver-Cohen, D. (2000). A framework for understanding corporate citizenship. Introduction to the special edition of corporate citizenship and the new millennium. Business and Society Review, 105 , 1–7.

Barnard, C. I. (1938). The functions of the executive . Cambridge, MA: Harvard University Press.

Bird, F. B., & Waters, J. A. (1989). The moral muteness of managers. California Management Review, 32 , 73–88.

Boatright, J. R. (1993). Ethics and the conduct of business . Englewood Cliffs, NJ: Prentice Hall.

Bowen, H. (1953). Social responsibilities of the businessman . New York, NY: Harper & Row.

Bowie, N. E. (1999). Business ethics: A Kantian perspective . Oxford, UK: Blackwell Publishers.

Brady, F. N. (1985). A Janus-headed model of ethical theory: Looking two ways at business/society issues. Academy of Management Review, 10 , 658–576.

Bremner, R. H. (1960). American philanthropy . Chicago, IL: The University of Chicago Press.

Carroll, A. B. (1979). A three-dimensional conceptual model of corporate social performance. Academy of Management Review, 4 , 497–506.

Carroll, A. B. (1991). The pyramid of corporate social responsibility: Toward the moral management of organizational stakeholders. Business Horizons, 34 , 3–112.

Carroll, A. B. (1999). Corporate social responsibility: Evolution of a definitional construct. Business & Society, 38 , 268–295.

Carroll, A. B. (2008). A history of corporate social responsibility: Concepts and practices. In A. Crane, D. M. McWilliams, & J. Moon (Eds.), The Oxford handbook of corporate social responsibility (pp. 19–46). New York: Oxford University Press.

Carroll, A. B., & Buchholtz, A. K. (2015). Business & society: Ethics, sustainability, and stakeholder management (9th ed.). Stamford, CT: Cengage Learning.

Center for Industrial Research and Service (CIRS). (2012). Sustainable supply chains: A guide to small-to-medium-sized manufacturers. Retrieved from http://www.ciras.iastate.edu/publications/CIRAS_Supply_Chain_Sustainability-2012.02.29.pdf

Chamberlain, N. (1973). The limits of corporate responsibility . New York, NY: Basic Books.

Clarkson, M. B. E. (1995). A stakeholder framework for analyzing and evaluating corporate social performance. Academy of Management Review, 20 , 92–117.

Cochran, P. L., & Wood, D. J. (1984). Corporate social responsibility and financial performance. Academy of Management Journal, 27 , 42–56.

Collins, D. (1988). Adam Smith’s social contract: The proper role of individual liberty and government intervention in the 18th century. Business & Professional Ethics Journal, 7 , 120–146.

Colyvas, J. A., & Powell, W. W. (2006). Roads to institutionalization: The remaking of boundaries between public and private science. Research in Organizational Behavior, 27 , 305–353.

Committee for Economic Development (CED), Research and Policy Committee. (1971). Social responsibilities of business corporations: A statement on national policy . New York, NY: Committee for Economic Development.

Crane, A., & Matten, D. (2004). Business ethics . New York, NY: Oxford University Press.

Davis, K. (1960). Can business afford to ignore social responsibilities? California Management Review, 2 , 70–76.

Davis, K. (1973). The case for and against business assumption of social responsibilities. Academy of Management Journal, 16 , 312–322.

Deal, T., & Kennedy, A. A. (1982). Corporate cultures: The rites and rituals of corporate life . Reading, MA: Addison-Wesley.

DeGeorge, R. T. (1990). Business ethics . New York, NY: Macmillan.

Donaldson, T. (1989). The ethics of international business . New York, NY: Oxford University Press.

Driver, M. (2012). An interview with Michael Porter: Social entrepreneurship and the transformation of capitalism. Academy of Management Learning and Education, 11 , 421–431.

Drucker, P. (1968). The age of discontinuity: Guidelines to our changing society . New York, NY: Harper & Row.

Dunfee, T. (1991). Business ethics and extant social contracts. Business Ethics Quarterly, 1 , 23–51.

Elkington, J. (1994). Towards the sustainable corporation: Win-win business strategies for sustainable development. California Management Review, 36 , 90–100.

England, G. W. (1975). The manager and his values: An international perspective from the United States, Korea, India, and Australia . Cambridge, MA: Ballinger Publishing.

Ernst & Young (EY). (2011). Six growing trends in corporate sustainability. Retrieved September 28, 2016, from http://www.ey.com/us/en/services/specialty-services/climate-change-and-sustainability-services/six-growing-trends-in-corporate-sustainability_trend-3

Fombrun, C. J., Gardberg, N. A., & Barnett, M. L. (2000). Opportunity platforms and safety nets: Corporate citizenship and reputational risk. Business and Society Review, 105 , 85–106.

Frederick, W. C. (1987). Theories of corporate social performance. In S. P. Sethi & C. Falbe (Eds.), Business and society: Dimensions of conflict and cooperation (pp. 142–161). New York, NY: Lexington Books.

Frederick, W. C. (1992). Anchoring values in nature: Toward a theory of business values. Business Ethics Quarterly, 2 , 283–303.

Frederick, W. C. (1995). Values, nature, and culture in the American corporation . New York, NY: Oxford University Press.

Frederick, W. C. (2006). Corporation, be good! The story of corporate social responsibility . Indianapolis, IN: Dog Ear Publishing.

Frederick, W. C. (2008). Corporate social responsibility: Deep roots, flourishing growth, promising future. In A. Crane, A. McWilliams, D. Matten, J. Moon, & D. S. Siegel (Eds.), The Oxford handbook of corporate social responsibility (pp. 522–530). New York, NY: Oxford University Press.

Frederick, W. C., & Weber, J. (1987). The values of corporate managers and their critics. In W. C. Frederick & L. E. Preston (Eds.), Research in corporate social performance and policy (Vol. 9, pp. 131–152). Greenwich, CT: JAI Press.

Freeman, R. E. (1984). Strategic management: A stakeholder approach . Marshfield, MA: Pitman.

Freeman, R. E., & Evan, W. (1993). Stakeholder management and the modern corporation: Kantian capitalism. In T. Beauchamp & N. Bowie (Eds.), Ethical theory and business (pp. 97–106). Englewood Cliffs, NJ: Prentice Hall.

Friedman, M. (1970, September 13). The social responsibility of business is to increase its profits. New York Times Magazine, 33 , 122–126.

Friedman, A. L., & Miles, S. (2006). Stakeholders: Theory and practice . New York, NY: Oxford University Press.

Global Reporting Initiative. (2012). A new phase: The growth of sustainability reporting—GRI’s year in review . Amsterdam, NL: GRI.

Grant, D. B., Trautrims, A., & Wong, C. Y. (2013). Sustainable logistics and supply chain management: Principles and practices for sustainable operations and management . Philadelphia, PA: Kogan Page.

Griffin, J. J. (1997). The corporate social performance and corporate financial performance debate: Twenty-five years of incompatible research. Business & Society, 36 , 5–31.

Hambrick, D. C., & Mason, P. A. (1984). Upper echelons: The organization as a reflection of its top managers. Academy of Management Review, 9 , 193–206.

Harris, R. G., & Carman, J. M. (1987). Business-government relations. In S. P. Sethi & C. Falbe (Eds.), Business and society: Dimensions of conflict and cooperation (pp. 177–190). New York, NY: Lexington Books.

Jackall, R. (1988). Moral mazes . New York, NY: Oxford University Press.

Jones, T. M. (1983). An integrating framework for research in business and society: A step toward the elusive paradigm? Academy of Management Review, 8 , 559–564.

Lindblom, C. E. (1977). Politics and markets . New York, NY: Basic Books.

Luthans, F., & Peterson, S. (2001). Employee engagement and manager self-efficacy: Implications for managerial effectiveness and development. Journal of Management Development, 21 , 376–387.

McWilliams, A., & Siegel, D. (2000). Corporate social responsibility and financial performance: Correlation or misspecification? Strategic Management, 21 , 603–609.

Meglino, B. M., & Ravlin, E. C. (1998). Individual values in organizations: Concepts, controversies, and research. Journal of Management, 24 , 351–389.

Melé, D. (2008). Corporate social responsibility theories. In A. Crane, A. McWilliams, D. Matten, J. Moon, & D. Siegel (Eds.), The Oxford handbook of corporate social responsibility (pp. 47–62). New York, NY: Oxford University Press.

Miles, R. A. (1987). Managing the corporate social environment . Englewood Cliffs, NJ: Prentice Hall.

Mitnick, B. (1993). Organizing research in corporate social performance: The CSP system as core paradigm. In J. Pasquero & D. Collins (Eds.), Proceedings of the International Association for Business and Society (pp. 2–15). San Diego, CA: International Association for Business and Society.

Moir, L. (2001). What do we mean by corporate social responsibility? Corporate Governance, 1 , 16–22.

Narveson, J. (2008). Social contract theory. In R. W. Kolb (Ed.), Encyclopedia of business ethics and society (pp. 1948–1955). Thousand Oaks, CA: Sage.

Oliver, B. L. (1999). Comparing corporate managers’ personal values over three decades, 1967–1995. Journal of Business Ethics, 20 , 147–161.

Orlitzky, M., & Erakovic, L. (2008). Triple bottom line. In R. Kolb (Ed.), Encyclopedia of business ethics and society (pp. 2110–2115). Thousand Oaks, CA: Sage.

Orlitzky, M., Schmidt, F. L., & Rynes, S. L. (2003). Corporate social and financial performance: A meta-analysis. Organization Studies, 24 , 403–441.

Orlitzky, M., & Swanson, D. L. (2012). Assessing stakeholder satisfaction: Toward a supplemental measure of corporate social performance as reputation. Corporate Reputation Review, 15 , 119–137.

Perrow, C. (1986). Complex organizations: A critical essay (3rd ed.). New York, NY: Random House.

Phillips, R. (2003). Stakeholder theory and organizational ethics . San Francisco, CA: Berrett-Koehler.

Porter, M. E., & Kramer, M. R. (2002). The competitive advantage of corporate philanthropy. Harvard Business Review, 80 , 5–16.

Porter, M. E., & Kramer, M. R. (2006). Strategy & society: The link between competitive advantage and corporate social responsibility. Harvard Business Review, 84 , 78–92.

Porter, M. E., & Kramer, M. R. (2011). Creating shared value. Harvard Business Review, 89 , 62–77.

Posner, B. Z. (2009). Values and the American manager: A three-decade perspective. Journal of Business Ethics, 91 , 457–465.

Posner, B. Z., & Schmidt, W. H. (1984). Values and the American manager: An update. California Management Review, 26 , 202–216.

Posner, B. Z., & Schmidt, W. H. (1992). Values and the American manager: An update updated. California Management Review, 34 , 80–94.

Preston, L. E., & Post, J. E. (1975). Private management and public policy: The principle of public responsibility . Englewood Cliffs, NJ: Prentice Hall.

Rokeach, M. (1973). The nature of human values . New York, NY: Free Press.

Savitz, A. (with Weber, K.). (2013). Talent, transformation, and the triple bottom line . San Francisco, CA: Jossey-Bass.

Schein, E. H. (1985). Organizational culture and leadership (1st ed.). San Francisco, CA: Jossey-Bass.

Schein, E. H. (2010). Organizational culture and leadership (4th ed.). San Francisco, CA: Jossey-Bass.

Scherer, A. G., & Palazzo, G. (2008). Corporate citizenship in a globalized world: Introduction to the handbook of research on global corporate citizenship. In A. G. Scherer & G. Palazzo (Eds.), Handbook of research on global corporate citizenship (pp. 1–21). Cheltenham, UK: Edward Elgar Publishing.

Chapter   Google Scholar  

Schmidt, W. H., & Posner, B. Z. (1982). Managerial values and expectations: The silent power in personal and organizational life . New York, NY: AMACOM.

Schwartz, H. (1991). Narcissistic process and corporate decay: The case of general motors. Business Ethics Quarterly, 1 , 249–268.

Selznick, P. (1957). Leadership in administration . New York, NY: Harper & Row.

Selznick, P. (1992). The moral commonwealth . Berkeley, CA: University of California Press.

Sethi, S. P. (1975). Dimensions of corporate social performance: An analytic framework. California Management Review, 17 , 58–64.

Sethi, S. P. (1979). A conceptual framework for environmental analysis of social issues and evaluation of business response patterns. Academy of Management Review, 4 , 63–74.

Simon, H. (1957). Administrative behavior . New York, NY: Macmillan.

Slaper, T. F., & Hall, T. J. (2011). Addressing a theoretical problem by reorienting the corporate social performance model. Indiana Business Review, 86 , 4–8.

Smith, A. (1776). An inquiry into the nature and causes of the wealth of nations . London, UK: W. Strahan.

Book   Google Scholar  

Spicer, B. H. (1978). Investors, corporate social performance, and information disclosure: An empirical study. Accounting Review, 53 , 94–111.

Suchman, M. (1995). Managing legitimacy: Strategic and institutional approaches. Academy of Management Review, 20 , 571–611.

Swanson, D. L. (1995). Addressing a theoretical problem by reorienting the corporate social performance model. Academy of Management Review, 20 , 43–64.

Swanson, D. L. (1996). Neoclassical economic theory, executive control, and organizational outcomes. Human Relations, 49 , 735–756.

Swanson, D. L. (1999). Toward an integrative theory of business and society: A research strategy for corporate social performance. Academy of Management Review, 24 , 506–521.

Swanson, D. L. (2008). Top managers as drivers for corporate social responsibility. In A. Crane, A. McWilliams, D. Matten, J. Moon, & D. Siegel (Eds.), The Oxford handbook of corporate social responsibility (pp. 47–62). New York, NY: Oxford University Press.

Swanson, D. L. (2013). Ethical competence in business leadership. In D. Menzel & T. Cooper (Eds.), Achieving ethical competency for public service leadership (pp. 71–90). New York, NY: M.E. Sharpe.

Swanson, D. L. (2014). Embedding CSR into corporate culture: Challenging the executive mind . Basingstoke, UK: Palgrave Macmillan.

Swanson, D. L., & Orlitzky, M. (2017). Toward a conceptual integration of corporate social and financial performance. In S. Diehl, M. Karmasin, B. Mueller, R. Terlutter, & F. Weder (Eds.), Handbook of integrated CSR communication (pp. 129–148). Berlin, DE: Springer Publishing House.

Swanson, D. L., & Orlitzky, M. (2018). Leading the triple bottom line: A corporate social responsibility approach. In D. S. Ones, N. Anderson, H. K. Sinangil, & C. Viswesvarian (Eds.), Handbook of industrial, work, & organizational psychology (2nd ed.). Thousand Oaks, CA: Sage.

Treviño, L. K. (1990). A cultural perspective on changing and developing organizational ethics. In R. Woodman & W. Passmore (Eds.), Research in organizational change and development (pp. 195–230). Greenwich, CT: JAI Press.

Velasquez, M. G. (1982). Business ethics: Concepts and cases . Englewood Cliffs, NJ: Prentice Hall.

Victor, B., & Cullen, J. B. (1988). The organizational bases of ethical work climates. Administrative Science Quarterly, 33 , 101–125.

Votaw, D. (1972). Genius becomes rare: A comment on the doctrine of social responsibility pt. 1. California Management Review, 15 , 25–31.

Waddock, S. (2009). Leading corporate citizens: Vision, values, value-added (3rd ed.). New York, NY: McGraw-Hill/Irwin.

Waddock, S., & Graves, S. B. (1997). The corporate social performance-financial performance link. Strategic Management Journal, 18 , 303–319.

Waddock, S., & Smith, N. (2000). Relationships: The real challenge of corporate global citizenship. Business and Society Review, 105 , 47–62.

Wartick, S. L. (2002). Measuring corporate reputation: Definition and data. Business & Society, 41 , 371–392.

Wartick, S. L., & Cochran, P. L. (1985). The evolution of the corporate social performance model. Academy of Management Review, 10 , 758–769.

Waters, J. A., & Bird, F. (1987). The moral dimension of organizational culture. Journal of Business Ethics, 6 , 15–22.

Weaver, G. R., Treviño, L. K., & Cochran, P. L. (1999). Integrated and decoupled corporate social performance: Management commitments, external pressures, and corporate ethics practices. Academy of Management Journal, 42 , 539–552.

Werhane, P. (1985). Persons, rights, and corporations . Englewood Cliffs, NJ: Prentice Hall.

Windsor, D. (2001). Corporate citizenship: Evolution and interpretation. In J. Andriof & M. McIntosh (Eds.), Perspectives on corporate citizenship (pp. 39–52). Sheffield, UK: Greenleaf Publishing.

Wolfe, R. (1991). The use of content analysis to assess corporate social responsibility. In J. E. Post (Ed.), Research in corporate social performance and policy (Vol. 12, pp. 281–307). Greenwich, CT: JAI Press.

Wood, D. (1991). Corporate social performance revisited. Academy of Management Review, 16 , 691–718.

Wood, D. J. (1990). Business and society . Glenview, IL: Scott, Foresman (Harper Collins).

Wood, D. J., Logsdon, J. M., Lewellyn, P. G., & Davenport, K. (2006). Global business citizenship: A transformative framework for ethics and sustainable capitalism . New York, NY: M.E. Sharpe.

Zeitlin, M. (1978). Managerial theory vs. class theory of corporate capitalism. In L. E. Preston (Ed.), Research in corporate social performance and policy (Vol. 1, pp. 255–263). Greenwich, CT: JAI Press.

Download references

Author information

Authors and affiliations.

Kansas State University, Manhattan, Kansas, USA

Diane L. Swanson

You can also search for this author in PubMed   Google Scholar

Rights and permissions

Reprints and permissions

Copyright information

© 2018 The Author(s)

About this chapter

Swanson, D.L. (2018). Society, Business Values, and the Social Contract. In: CSR Discovery Leadership. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-59954-0_2

Download citation

DOI : https://doi.org/10.1007/978-3-319-59954-0_2

Published : 04 August 2017

Publisher Name : Palgrave Macmillan, Cham

Print ISBN : 978-3-319-59953-3

Online ISBN : 978-3-319-59954-0

eBook Packages : Business and Management Business and Management (R0)

Share this chapter

Anyone you share the following link with will be able to read this content:

Sorry, a shareable link is not currently available for this article.

Provided by the Springer Nature SharedIt content-sharing initiative

• Publish with us

Policies and ethics

• Find a journal
• Track your research

Defining a New Social Contract: The Role of Business in Democracy

Much of the world is increasingly concerned about inequality, climate change, and widespread political dysfunction. Over the past year, problems have been magnified by the COVID-19 pandemic, also prompting new questions about whether the liberal democratic order established after World War II has run its course. If ideologies must change or evolve, leaders in societies across the globe will need to build a new consensus, essentially a new social contract, regarding collective values, accepted behaviors, modern norms, and related institutions, as well as the role of civil society and the private sector.

Social contracts are informal mechanisms, often generated at the local level but understood throughout society. Social contracts represent tacit agreements between the rich and poor, the powerful and the powerless, the government and those governed. Social contracts are how we live in peace in our countries within legal frameworks, but just as importantly, through informal mechanisms like the norms and common expectations that guide our day-to-day activities.

Meeting the Moment

By their nature, social contracts are somewhat free flowing. While often formalized or legalized somehow, they mirror the rights, responsibilities, opportunities and protections that society at large agrees to provide. Social contracts often form or change amid crises and response periods, such as the tumultuous years between World Wars I and II. That period included a severe global flu pandemic, the Wall Street Crash that ushered in the Great Depression, and the development of many new government, citizen-led support programs and collective thought. In the moment, such as the coronavirus pandemic now, it may be hard to know for sure that we have arrived at a new social contract and whether it is yielding positive results and cohesion than can overcome the current discontent and clashes. The most important tenets, benefits, and implications may only be clear in hindsight.

Social contracts represent tacit agreements between the rich and poor, the powerful and the powerless, the government and those governed.

Similarly, when social contracts fail to meet the expectations of a good number of citizens, heightened levels of populism, racism, and class conflict tell us a re-think is required. Trust in political, social, and economic institutions often suffers, and as a result, the ability to re-formulate the social contract becomes even more challenging.  At such points, leadership must emerge from all corners of society to shape the dialogue. Relying on political consensus alone does not sustain a solution, behaviors and expectations must adjust in all institutions.

History shows us that democracies are successful, in part, because they have a dynamic ability to modify social contracts by providing real time feedback on their successes and failures, and a wide variety of platforms on which a social contract dialogue can occur.  Free media, active civil society, business associations and labor all play a role in encouraging social dialogue and reform.  Authoritarian states which lack these mechanisms rely on political power to enforce a top-down vision for social cohesion. They lack or spurn feedback mechanisms and the political will to identify and address failures, resulting in a more brittle political and social dynamic.

Keeping Pace with Change

As our institutions underpin our social consensus, they require a re-think and a re-tooling to keep pace with change. The complex new global environment in which we live enables and often demands faster reaction time than in the past, although all parts of the world are never growing at the same pace. In recent decades, the sweeping power of technology-driven globalization has increasingly surpassed the ability of current institutions to anticipate possible outcomes and govern accordingly.

For example, workers in many advanced economies once counted on having lifelong jobs with a single employer, complete with a range of social benefits. A multitude of advancements and industrial relocation have eliminated traditional sources of job security and our social institutions seem to have failed to guarantee the prospects for meaningful employment or professional growth in many cases. Additionally, the face of the global labor force has changed significantly to include more women and other marginalized groups seeking expanded rights to work and own businesses. Positive movement on issues such as gender equity and human rights, trade policies, digital economy opportunities, and climate change require global consensus, which can come into conflict with local interests and norms.

History shows us that democracies are successful, in part, because they have a dynamic ability to modify social contracts by providing real time feedback on their successes and failures, and a wide variety of platforms on which a social contract dialogue can occur.

The formation of a new social contract must fold in all of the aforementioned developments and concepts, as well as bind East and West, North and South. This must include addressing a growing competition between democratic values and authoritarian autocracy. Thus, the development of a new social contract is not just the responsibility of national governments. This will require more effective mechanisms to balance local and diverse interests with global norms. Civil society and the private sector must play a more expanded role, lending their expertise and resources.

If we accept that we now live in an expanded world of stakeholders and influencers, then we should also acknowledge that various groups have different experiences and needs. An iterative process that gives voice to all and seeks common interests should eventually lead to an equilibrium that we recognize as a new social contract. This would require that local institutions not only respond to the needs of their communities, but also to the growing demands and standards associated with global issues and institutions (intergovernmental, economic, technological, and nongovernmental). That includes private enterprise, which through its activities provides the growth and employment that finance social cohesion.

Role of Business in the New Social Contract

As the economic engine, what should business collectively be recommending and asking for as the requirements of a new social contract? Before answering that question, two assumptions should guide our thoughts:

First, let us recognize that business is not a monolith. Firms come in many shapes, sizes, and sectors. They have very different attitudes regarding return on investment and values. Companies are as much a product of their local business environment as any other group, and as such, have differing priorities. However, globalization has helped lay bare both new commonalities and challenges faced by all private enterprises. If we do not address these properly, the potentially constructive role business must play in a new social contract may elude us.

Second, we should also be ready to accept that the experience of globalization has been largely positive for much of humanity. In addition to increasing the scale and reach of information flows and products, globalization has underscored the importance of well-governed, competitive markets. There is nothing wrong with questioning and improving the global economy to deliver better outcomes to more people, but we should not throw the baby out with the bathwater when working to build a better world.

A key driver in further discussions will be how profits and benefits are viewed. Profit and gain can take many forms, including efficiencies and innovations. How we arrive at profits and use them to solve problems is at the heart of a social consensus. Historically the fiduciary responsibility of company leaders has been solely to the owners of the company. Today more corporations are pledging to embrace ESG principles (Environmental, Social, and Governance) to provide better opportunities at home and in emerging economies and frontier markets. Despite continued debate by some that ESG efforts diminish financial returns and that potential risk-reward measurements are difficult, most experts agree that ESG matters merit more attention than ever from companies. The CEO of investment giant BlackRock even calls it the “new standard for investing.”

Driving the New Paradigm

With all of this in mind, and understanding that private enterprise is at the heart of growth and must be a partner in resolving the challenges our world faces, there are several ideals, values, and efforts that should drive the paradigm for commerce:

• FAIRNESS AND OPPORTUNITY: Values of fairness and opportunity should govern our approach to markets. If prosperity is to reach all corners of society, all must have an equal shot at creating it. Business environments must favor fair competition. Economic entry needs to be accessible. Economic governance needs to be effective, but that isn’t enough. Education, workforce preparation, and infrastructure promote economic development and drive public investment. Cronyism, protectionism, and misuse of the state-owned sector are brakes on development, as evidenced in the threat to society posed by what CIPE calls “corrosive capital.”
• ANTI-CORRUPTION AND ACCOUNTABILITY: Corruption must be seen as a global threat to progress. Corruption undermines the rule of law, competition, and public welfare. Improving transparency and fighting corruption is crucial to establishing the rule of law, enhancing business environments, and ensuring that democracy is inclusive. From petty bribes to kleptocracy, corruption is a disease that undermines the ability of states to reform, fair competition to exist, and ethical investment to flow. Authoritarian states use corruption to extend their interests, and they block governance reforms that undermine these corrupt networks. Business must be a partner with government and civil society in efforts to create environments that counter corruption and reward honesty.
• ETHICS AND SUSTAINABILITY: We should encourage business, investment, and consumer environments that reward ethical and sustainable business practice. The role of the private sector as a partner in the UN Sustainable Development Goals attainment is recognized, and many firms are stepping up their own commitments to sustainability based on business principles of risk management. However, corrupt and poor rule of law environments sustain markets in which poor practice is incentivized. The business community must become a champion for ethical and sustainable practices, and market conditions need to support these efforts. Both governments and consumers have a supportive role to play by ensuring a competitive and consumer environment that rewards good practice. CIPE defines constructive capital as investments that are transparent, accountable, and market-oriented. It reinforces democratic and ethical values.
• INCREASED ACCESSIBILITY: Globalization must be more accessible. Digital technology is the great leveler in business. Small- and medium-business now has access to global markets, but our institutions have not kept pace. Local organizations must invest in infrastructure, digital literacy, digital identity, and cashless payment. At local and global levels, we must create a consensus on data management, digital freedom, and e-commerce regulation. Addressing non-tariff barriers, exclusionary industrial policies, and promoting trade facilitation reforms are also necessary to improving SME access to global trade. WTO reform should also be encouraged to deliver greater access for all market participants and promote a fairer and more competitive trading system. Meanwhile, women make up the bulk of the SMEs and the informal sector. Their equal participation in the economy could increase global GDP by $26 trillion, according to a 2015 McKinsey Report .
• NEW APPROACHES: New models for public-private partnership and dialogue are required. The relationship between the state, business, civil society and citizens must be examined. Credible reform needs to be based on transparent dialogue and partnership between these stakeholder groups. Government must become more open, accessible, and responsive, business must be prepared to be an articulate and constructive contributor to consensus, and citizens must be empowered to participate in dialogue through civil society and democratic engagement. CIPE is helping chambers of commerce and other business organizations play a key role as interlocutors, information and service providers, and community leaders towards the new social contract.

The Need for Trust and Leadership

What stands in the way of this vision? Trust and leadership.

Trust, or more precisely the lack of trust prevalent in many societies, is manifested on two levels. Opinion surveys indicate that faith in governments and institutions (including business) to deliver change, or do so in a timely fashion, is eroding . Building a new social contract will require rebuilding trust. Experts in trust tell us that accountability, transparency, communication, and confidence building are necessary building blocks . The process requires thoughtful leadership to recognize the nature of our disfunction, and to take the first steps toward rebuilding trust.

In democracies, political leadership is traditionally a lagging participant in social change, but is powerful once mobilized. Early leadership on social consensus comes from the grassroots: from civil society, labor, and business. It is amplified through media, and finally picked up upon by politicians. If business is looking for leadership to help build a new social contract, then business must claim its role in leadership, and do so in a way that can inspire trust.

Chambers and associations are traditional venues for dialogue, but themselves often require modernization to respond to evolving private sector and societal needs. They must strive to better represent the diversity present within the private sector, and to move beyond their comfort levels when responding to issues of inequality, opportunity, education, and basic needs. CIPE’s Business Integrity Guidebook provides a roadmap for ethical corporate behavior that can pay off by shaping a new social contract.

The bottom line: relationships between the business community and other civil society groups must expand from dialogue to partnership. And, the ability to convene powerful interests should be extended to include those whose voices sometimes struggle to be heard but are largely affected. If the private sector is to be viewed as a leader and innovator in the push for positive change or progress, the overall business agenda for a social contract must include re-building institutions and practices that afford sustainable growth and wider opportunity.

Published Date: February 22, 2021

Related Content

How the private sector can strengthen healthy information ecosystems, navigating global interdependence: enhancing economic resilience in the transatlantic space, enthusiasm for private sector anti-corruption reform in paris at gacif 2024.

Project Management for Software Development

Tutorials and tools for managing, estimating, planning and tracking software development projects: PMP, Agile, Scrum, Lean, Kanban

Social Contracts

by Project Management Planet · August 23, 2011

This video presents the social contract. It contains a set of rules a team agrees to, that are above and beyond what their basic project roles and responsibilities mandate. It consolidates everyone’s understanding of how the team will behave and interact. The contract can differ from project to project.

Related material: http://www.agileacademy.com.au/agile/sites/default/files/Social%20Contract%202011.pdf

• share  
• tweet  

Tags: agile team

You may also like...

Inside a Holacracy Implementation

November 6, 2019

Software Development Project Team Alignment

July 14, 2021

5 Best Tools that Make Organization at Work a Breeze

February 1, 2021

Share this Knowledge

Subscribe to methods & tools.

Subscribe to Methods & Tools Software Development Magazine if you are not afraid to read more than one page to be a smarter software developement project manager!

The Urgency of a New Social Contract​

By dunstan allison-hope, vice president, bsr and katie abbott, manager, inclusive economy, bsr.

• Tuesday April 7 2020

In the United States, the crisis we are experiencing has laid bare the failure of the current social contract in many ways: the lack of access to healthcare owing to the tying of health insurance to paid employment; the extreme vulnerability of gig-economy workers to a sudden downturn of business; and for many workers, the absence of paid sick leave, inadequate childcare, and insufficient unemployment insurance.

The social contract was not fit for purpose before the COVID-19 pandemic struck, but these and many other shortcomings have now been revealed in the most human, tragic, and devastating ways.

During this public health and economic emergency, the attention of business and government is understandably on near-term priorities, like maintaining employment, providing sick leave for those who need it, helping with short-term financial needs, and supporting the immediate needs of our healthcare system.

But let’s not kid ourselves. These are not sustainable solutions.

In due course, we will need to turn our attention to modernizing our social contract for the 21st century—a social contract that allows the overall economy to thrive by enabling everyone to participate in, and benefit from, economic activity.

But what does “modernizing the social contract” mean in practice?

• It means recognizing the fundamental changes in work, technology, demographics and family structures that have occurred since our current models were developed.
• It means a radical overhaul of the social safety net, including pensions, unemployment insurance and sick leave.
• It means investment in families, including parental and elder care leave, childcare, and annual leave.
• It means improved conditions for workers, including predictable schedules, portable benefits, living wages, and flexible working arrangements that benefit businesses and workers alike.
• It means creating fair tax policies, addressing inequity, enhancing the status of women in the workplace, and providing opportunities for historically marginalized communities.

And it means investing in our workforce by providing access to education and skills development and enabling people to thrive as automation and the transition to a low-carbon economy take hold.

Crucially, it also means taking these steps in ways that enable business innovation to flourish.

The response of many companies to the crisis has been excellent in the near term. Numerous businesses are rising to the occasion by preserving employment, supporting their workers and communities, and calling for government to reinforce the social safety net when it most badly needed.

But more is needed. At BSR, we want to make sure we build for the future beyond this extraordinary moment, to create and realize a new vision for the shared interests of government, business, employees and people. We want to make sure that we “build back better” by activating today’s intense focus on the failings of our current social contract and turning it into a movement for long-term change.

Critically important to achieving this ambition is the fact that the many private and public sector innovations across different social and economic issues and institutions will provide experiments grounded in reality, not theory, and can be built upon to envision, design, and implement new social and economic structures, policies, and programs.

Last year, BSR launched an effort calling for a modernized social contract for the 21st century, and prior to the COVID-19 pandemic, we had plans to engage our member companies during 2020 to advance this effort. However, now is the time to accelerate and increase our ambition.

For this reason, we’re inviting all our member companies and partners interested in seizing this moment to modernize the social contract to get in touch and co-create a plan of action.

There are several additional steps that businesses can and should take to remake the social contract once the current crisis passes.

• Call for wage levels that enable working families to support themselves and that also create a level playing field so that all businesses can compete fairly.
• Promote portable benefits systems that allow labor market flexibility alongside stability and security for workers.
• Reinforce pension systems that recognize and are prepared for longer life spans, the decline of defined benefit pensions, and more frequent job changes.
• Family leave policies that recognize a more diverse set of family structures and the need for both childcare and elder care.
• Skill development that delivers a thriving economy and access to livelihoods for people who will work longer and need to develop new capabilities as the economy changes.
• Ensure that the new social contract reflects new factors: the transition to a net zero carbon economy, the need to manage data safely, and the diversity imperative.

These steps would undoubtedly benefit from a common vision of modern social contracts and a united business voice conveying that vision. We hope that the six principles for 21st-century social contracts that we highlighted earlier can act as a starting point.

Moreover, the social contract is not going to be (and should not be) modernized by business alone. It requires a common effort that brings together companies, government at all levels, worker representatives, and civil society organizations.

Times of crisis are very often seen in retrospect as the flowering of innovations that lead to human flourishing in ways we could not have imagined. We are living through an epic historical moment. Let us hope that when history looks back on 2020, the story is one of resilience in the moment and creativity for a better future.

Originally appeared on  BSR . 

Share this story

Leave a Reply Cancel reply

You must be logged in to post a comment.

Managing Gender Inequalities in Supply Chains with Sam Ludlow Taylor

Business Fights Poverty Global Goals Summit 2024

How SMEs Can Gain a Competitive Edge by Embracing UN SDGs

Fields of Change: Making Cotton Work Better for Women

Financial Empowerment for Young Entrepreneurs: A Strategic Imperative

Prioritising Digital Wage Payments for Women is Good Business for Businesses

Unlocking Economic Growth: How the Private Sector Can Empower Forcibly Displaced Communities

Business Fights Poverty is proud to be a Founding UK B Corp.

  © 2023 Business Fights Poverty .  

  The Business Fights Poverty logo and tree device are registered trademarks. 

  View Our Values, Terms and Conditions .

• Economic Development
• Human Rights and Governance
• Sustainable Development
• Social Welfare

• Funders & Investors
• Guiding Principles
• Our History
• President & CEO Transition
• Accounting & Finance
• Board Opportunities
• Fiscal Sponsorship Projects
• Strategic Consulting
• Leaders Circles®
• Financial Leadership Cohorts
• Social Enterprise Accelerator Cohort
• Past Cohort Learning Initiatives
• Nonprofit Infrastructure Grant Program
• Seeding Cultural Treasures
• Case Studies

Social Enterprise Business Plan

A social enterprise is an activity of a nonprofit that employs entrepreneurial, market-driven strategies for earned income in support of its mission. This outline for a social enterprise business plan is a guide for research, planning, and writing a business plan for nonprofit social enterprises.

A social enterprise is an activity of a nonprofit that employs entrepreneurial, market-driven strategies for earned income in support of their mission. Business plans are a common tool for entrepreneurs when starting or growing a business enterprise. For nonprofits that are starting or growing a social enterprise as a part of their program activities, developing a business plan is an essential step. While social enterprise business plans address all of the questions needed for any business, nonprofits also need to consider the alignment with mission, organizational background and structure, and evaluation of both financial and social impact.

This outline for a business plan is a guide for research, planning, and writing a business plan for nonprofit social enterprises. The sections below are provided as a roadmap for the plan. Most business plans include each of these sections, though the length and amount of detail will vary depending on the nature of the enterprise, the complexity of the organization, and the purpose and audience for the plan.

Executive Summary

The Executive Summary provides the most important information for readers that need to understand and support the concept but not necessarily know the detailed plans. This is usually written last.

• Organizational description
• Business concept
• Market description
• Value proposition, or competitive advantage
• Key success factors
• Financial highlights and capital requirements

A social enterprise of a nonprofit organization may contribute directly to achieving mission; may be complementary or supportive of mission; or may be unrelated to mission (with primarily financial goals). The alignment to mission is a critical question.

• Organization mission and/or vision statement
• Relationship of social enterprise to organizational mission, or separate mission for the enterprise

Background and Structure

This section summarizes the organization’s history and programs and how the enterprise will fit in to the larger organization.

Most social enterprises operate as an activity or program within the nonprofit, though some are legally structured as a separate nonprofit, a for-profit subsidiary, or an independent organization.

Form should follow function and the legal structure should support the purpose and activities of the enterprise. Advice from an expert attorney may be needed.

• Brief description of the nonprofit, including context and programs
• How the business venture will be structured in the organization
• Legal structure and governance (Boards, advisory committees, reporting)

Market Analysis

The market analysis is the heart of the business plan and is too often inadequately explored when planning a social enterprise. Solid research is necessary to understand the target customers and how the enterprise will meet a gap and demand in the market. No amount of mission or commitment will overcome a deficiency in market knowledge and a bona fide demand for the product or service.

• Summary of current market situation
• Target market and customers
• Customer characteristics, unmet demands and buying factors

Competitive Analysis

This section describes the competitors, both nonprofit and for-profit, and the value proposition, or market advantage, of the proposed business.

• Primary competitors
• Competitive products/services
• Risks and opportunities in competitive market
• Recent or emerging changes in the industry
• Specific description of competitive advantage/value of proposed product or service

Products/Services

This section is a summary of the product or service that will meet the demand in the market. It does not need to include detailed descriptions, price lists or other materials.

• Product/service description
• Positioning of products/services
• Future products/services

Marketing and Sales

This section will describe how the organization will reach the target market and turn those prospects into paying customer.

• Marketing strategy
• Sales tactics
• Advertising, public relation, and promotions
• Summary of sales forecasts

This is the “how to” section, describing the creation and delivery of the business’ product or service.

• Management structure
• Staffing plan and key personnel – if this includes programmatic elements related to the mission, expand this section
• Production plan or service delivery, including summary of costs of materials and production
• Customer service/support strategy and plan
• Facilities required, including specialized equipment or improvements. If the business is retail, discuss location characteristics

Evaluation and Assessment

Most for-profit businesses measure their success by the financial results. Social enterprises have a double bottom line (or a triple bottom line.) This section describes the factors that will be evaluated to assess the success of each aspect of the enterprise.

• Quantifiable financial goals
• Quantifiable mission goals
• Monitoring and evaluation strategy

Financial Plan and Projections

The financial section includes projections for revenue and expenses for at least three years with a summary narrative of the key assumptions. This section also details the start up costs for capital equipment, inventory, initial marketing and staffing, and subsidy needed to cover losses during the start up period. These capital requirements may be funded from a combination of contribution from the nonprofit, grants for the enterprise, and/or debt financing.

• Start up costs and investments in equipment, technology, or one time costs
• Capital requirements and sources
• Income and expense projection
• Pro forma balance sheet for start up
• Cash flow summary or projection
• Assumptions and comments
• Share on Facebook
• Share on LinkedIn
• Share on Twitter

About Propel

Propel Nonprofits is an intermediary organization and federally certified community development financial institution (CDFI). We provide capacity-building services and access to capital to support nonprofits in achieving their missions including the ability to link strategy, governance, and finance and to support nonprofits throughout their organizational lifecycle.

How to Start a Small Business in 10 Steps

Learn how to start a small business from scratch with expert guidance. Get essential tips and steps for launching your dream journey successfully.

Brett Grossfeld

Share article.

Do you have a killer idea that you think would be perfect for launching a small business? If you believe what you see on TikTok, becoming an entrepreneur is just about as easy as posting a 30-second video. But in the real world, launching a small business can be a bit more challenging.

Starting a small business may seem daunting, but if you ask those same business owners if it’s worth the risk — few would trade the opportunity to shape their own destiny.

But where to start? Thankfully, you don’t need to have everything figured out before going out on your own. Successful small business owners are constantly learning from their mistakes — and improving their ideas and dreams along the way.

If you’re ready to take the leap and become a small business owner, keep reading.

Here’s what you’ll learn:

What is a small business, how much does it cost to start a small business, how to start a small business in 10 steps, what do you need to start a small business, start small — but think big.

Small businesses are generally defined by the U.S. Small Business Administration (SBA) as independent operations having fewer than 200 employees. And the majority of small businesses in the United States have fewer than five employees, according to the U.S. Census Bureau . 

But the number — or lack — of employees doesn’t necessarily define a “small business.” A business’s size can also be determined by the number of sales, the range of individual business locations, and other factors.

Along with size requirements, the SBA considers a company to be small if it’s:

• Independently owned and operated
• Not dominant in its field
• Physically located and operated in the U.S. (or a U.S. territory)

If your company meets the SBA’s definition of a small business, many government programs offer resources and local assistance for you to turn your dreams into reality.

Start Your Small Business With Big Things

Grow Your SMB All In One Platform

DEMO: See For Yourself For Free With Starter Suite

Build Your SMB Marketing Strategy With This Free Guide

TRAILHEAD: Starter Suite Quick Look

If you’re skilled in a certain trade — say, bookkeeping — you can launch a business with almost no money . But if your idea needs to be fleshed out and developed by researchers, scientists, and engineers, your startup costs can run into the hundreds of thousands of dollars and beyond. But most startup costs fall somewhere in the middle. 

Factors that influence cost

A sole proprietor working from home is going to have very different startup costs than a Silicon Valley startup flush with venture capital funds. But it doesn’t matter if you have $1,000 or $1 million to launch your small business — you’ll need to have a budget.

Are you moving the clutter out of your garage to make room for a desk? Or are you going to hire an architect to remodel a warehouse space in a trendy neighborhood? Obviously, both businesses are going to have wildly different expenses.

Think about your budget and what you can afford to get started. And it’s good to assume that unexpected expenses will pop up along the way — especially in your first year of business.

What kinds of costs to expect

The SBA has a worksheet that will help you calculate typical expenses for a small business, including one-time expenses such as:

• Rent : This includes security deposit, first month’s rent and utilities. If you’re working from home, you can deduct a percentage of your rent or mortgage on your taxes .
• Improvement costs: Anything that you might spend on your physical place of business to make it suitable for work.
• Inventory : If you’re selling a product, you’ll need goods to keep up with customer demand.
• Employees : This includes payroll, payroll taxes, and health insurance.
• Professional services: Accountants, lawyers, and consultants will all need to be paid
• Supplies : Think office supplies, such as paper and pencils, and operating supplies, like computers and printers.
• Marketing: Business cards, stationery, flyers, and advertising all fall under this category.
• Miscellaneous : This includes licenses, permits, legal fees, signage, technology, and accounting software. Everything else — liability insurance, repairs, maintenance, and dues.

The most difficult part of starting a small business is committing to your vision. It’s easier if you break down the process into small, achievable goals. Here are 10 steps that will get you on your way:

1. Do your research

If you don’t do basic market research before you launch your business, you may be down for the count before you even get started. Ask neighbors, friends, and even your barista if they would be interested in your product or service — and ask how much they’d be willing to pay for it. 

Conduct competitor research, local and global searches, and even offer surveys to consumers to see what the need versus want ratio is. 

2. Write a business plan

A business plan is your roadmap; it helps guide you as you start and grow your company. If you need capital to get started, most investors will want to review a business plan before they commit to any financing. 

To organize your ideas, download and fill out a business plan template . A well-written business plan provides clarity, confirms the math, and helps you establish goals so your business has the best chance of success.

3. Choose a business name

Finding the perfect brand name is a vital step in launching a new business. But hiring a professional naming company doesn’t come cheap — it can cost as much as $100,000 , according to Fast Company. 

If that’s outside your budget, there are countless AI-powered business name generators available online, and Fiverr has entrepreneurs who will help brainstorm business names for three figures or less.

4. Decide on your location

Take a look at the taxes, zoning laws, and regulations in your location. You may find that operating your business in a different location could offer financial advantages. Review the fees, costs, and tax benefits of each state to see which location makes the most sense for your business . A strategic move may put you ahead of the game before you even open the doors.

5. Get your finances in order

Startup costs discourage many would-be entrepreneurs, but the reality is that many successful businesses got started with little more than a vision, discipline, and hard work. However, if you really need cash for that newly opened business bank account, here are four ways of getting that money:

• Self-funding: If you have the means, you may use your own earnings to kickstart your business or see out financial counsel to work it into your budget.
• Outside investors: For a stake in your company, relatives or venture capitalists may be willing to invest in your business.
• Small business loans: If you want to keep full ownership of your business, a small business loan may be the way to go.
• Crowdfunding: If you’re feeling creative and confident, try sites such as Kickstarter or GoFundMe to generate capital.

6. Take care of the legal stuff

Register your business in the state where it was formed — and make sure that you’re set up to pay state income and unemployment tax. Review whether your local municipality requires filing for a license or permit to operate your business. 

To satisfy Uncle Sam, apply for an EIN from the IRS . Confirm that no one else is using your business name by contacting your state filing office or online database. Some business structures require using a doing business as (DBA) name, and you may be required to open a business bank account.

7. Develop a marketing plan

Once you have a terrific name for your company locked down, you’ll want to create an online presence for your business. Be consistent on your social media channels , ideally creating accounts on the channels — meeting them online where they are. 

Develop a website that’s intuitive and filled with all the information your customers need. Your marketing may also include advertising campaigns and public relations.

8. Set up your CRM software

To enhance your marketing efforts and grow your small business, try customer relationship management ( CRM) for Small Business . This will be your solution for storing and managing prospect and customer information such as contact information, accounts, leads, and sales opportunities — all in one single source of truth. 

With Salesforce’s Starter Suite , you can start in minutes and easily manage your marketing, sales, and customer service as your business scales.

9. Launch your product or service

Congratulations: You’ve done all the hard work and you’re ready to introduce your product to the world. Make sure to announce your launch on social media — and consider throwing a media-friendly bash to celebrate.

10. Keep your customers happy

When you use CRM software, you can keep track and personalize support for all your customers. And happy customers are good for business — 80% of them say the experience a company provides is just as important as its products or services .

The United States has more than 33 million small businesses, according to the U.S. Chamber of Commerce , and that number represents 99.9% of all U.S. businesses. And most of those small businesses started the same way — with an entrepreneur and an idea. But it takes more than just a dream to launch a small business.

So, where to start?

It’s time to take some notes. First, start outlining your business plan. If you’re stuck, ask yourself these four questions when developing your plan :

• Goals : What do you need to accomplish to achieve your vision?
• Methods : What are the steps you need to follow to get you there?
• Measurements : How will you determine when each objective has been met?
• Obstacles : What could throw you off course along the way?

Once you’ve written a business plan and are feeling confident, you’re ready to establish:

A name for your business

A great business name should succinctly identify your company and its audience. Brainstorm and get feedback from friends, family, and potential customers. And before you fall in love with your new company name, make sure that an established business in your industry isn’t already using that name.

A location for your business

Choosing where to conduct business is one of the most important decisions you can make for your small business. While staying close to home may be your first instinct, a change of venue may prove to be financially advantageous.

A business structure

For tax purposes and protection of personal assets, you need to choose a business structure that offers the right balance of legal protections and benefits. Common business structures include sole proprietorship, partnership, limited liability company (LLC), corporation, and cooperative.

A legal presence

If you want personal liability protection, legal protection, and tax benefits for your company, you’ll need to register your business with state and local governments.

Federal and state tax ID numbers

Your Employer Identification Number (EIN) works like a personal Social Security number, but for your business. You need an EIN to pay state and federal taxes for your company.

Licenses and permits

Whether your business needs to apply — and pay for — licenses and permits depends on your business activities, location, and government rules. Review regulations from city, state, and federal agencies.

A business bank account

Opening up a bank account exclusively for business use will help keep your personal finances separate, making life easier at tax time. There are several banks that will allow you to open a business checking account with a zero balance, but traditionally banks will require an opening deposit of anywhere from $1,000 to $25,000.

Start-up funds

Even if you open a business checking account with a zero balance, you’re going to want to have some funds to cover basic operating expenses. The SBA offers guidance on obtaining funding for your small business, including loans, grants, and investors.

Starting a new business may feel like a gamble, but business insurance will help you cover your bet. The right insurance policy will help protect you against accidents, natural disasters, and lawsuits.

You should also consider:

Customer relationship management

A CRM platform keeps your customer data organized and provides the foundation to build connected customer experiences (that can be made even better through artificial intelligence). Starting with a suite of sales, service, marketing, and commerce tools is easy.

Invoice and billing software

While it is possible to keep track of your financial records on a traditional paper ledger, modern invoice and billing software makes the process much, much easier.

A graphic designer

A well-designed logo can make or break a business. The Nike “swoosh” was created by a graphic design student — and the $35 Nike initially spent paid for itself many times over.

Many small businesses exist with just a presence on social media, but having a professionally designed website adds legitimacy to your business.

Marketing experts

Like graphic design, marketing expenses are costs that many small business owners initially want to avoid. But strategically investing in a marketing campaign can be a boon for a small business that wants to make noise in a crowded marketplace.

A Human Resources department

Once your business grows to a certain size, it’s time to create a human resources (HR) department — or, at least, to hire an HR professional. This professional can focus on things such as labor law compliance, employee recruitment, employee engagement and development, and compensation and benefits management while you manage your business.

An assistant

For most small businesses starting out, hiring an assistant to perform administrative and clerical duties is something of a luxury. If your budget is tight, consider a virtual assistant .

What are some popular small business ideas?

If you have a unique idea for a small business, great. But some of the best small business ideas build on your strengths and experience. What do you love to do? What lights you up when you are helping the community? Do you have a pull to do something more?

What are the odds that my small business will succeed?

Starting a small business is no guarantee of success. Approximately 80% of small businesses survive their first year, according to the Bureau of Labor Statistics. The survival rate decreases to 50% after five years and 30% after 10 years.

What are some Fortune 500 companies that started small?

Not all big companies started with millions of dollars in venture capital. Some of America’s biggest brand names had far more modest beginnings . Apple famously got started in a Silicon Valley garage, while Mattel was building dollhouse furniture from picture frame scraps in its early days.

What are the most business-friendly states?

Before setting up shop in New York or California, consider launching your small business in North Dakota, Indiana, Arkansas, South Dakota, or North Carolina. These states offer the best conditions to start a business , according to Forbes Advisor.

What can I deduct for my small business at tax time?

(Almost) everyone knows that you can deduct entertainment and travel expenses as a small business owner. But you can also deduct software subscriptions, office furniture, and interest on small business loans, according to NerdWallet .

Taking the leap to start your own small business is just the first step on your entrepreneurial path. But you’re in good company. Nearly half of all U.S. employees are employed by a small business — and more than 80% of those small businesses are solo ventures , according to Forbes Advisor. There’s no better time than the present to start turning your dreams into reality.

Want to grow your new small business? Sign up for a Salesforce free trial .

Just For You

What Is Project Management? (A Comprehensive Guide)

Generative AI Regulations – What They Could Mean For Your Business

Explore related content by topic

• Future of Work
• Salesforce CMS
• Small Business
• B2B Commerce
• Best Practices
• Sales Strategy
• Sales Fundamentals

Brett Grossfeld is a Product Marketing Manager supporting Salesforce's CRM, data, and AI tools. He's written for multiple websites across various industries and interests, including tech, wellness, and modern customer experiences.

Get the latest articles in your inbox.

What Is ERP? (A Beginners Guide)

How To Write a Business Plan in 9 Steps

AI For Small Business is Here — Get Ready With These Tips 

How to Write a Business Proposal for Small Businesses

Digital Marketing for Small Business: Here’s How You Can Do It

27 Top Sales Influencers You Should Follow in 2024

What Is an SMB and What Do You Need to Know to Be Successful?

4 Ways Your Contact Center Can Get Started With Generative AI

360 Highlights

Yes, I would like to receive the Salesforce 360 Highlights newsletter as well as marketing emails regarding Salesforce products, services, and events. I can unsubscribe at any time.

By registering, you confirm that you agree to the processing of your personal data by Salesforce as described in the Privacy Statement .

Thanks, you're subscribed!

New to Salesforce?

• What is Salesforce?
• Best CRM software
• Explore all products
• What is cloud computing
• Customer success
• Product pricing

About Salesforce

• Salesforce.org
• Sustainability

Popular Links

• Salesforce Mobile
• AppExchange
• CRM software
• Salesforce LIVE
• Salesforce for startups
• América Latina (Español)
• Brasil (Português)
• Canada (English)
• Canada (Français)
• United States (English)

Europe, Middle East, and Africa

• España (Español)
• Deutschland (Deutsch)
• France (Français)
• Italia (Italiano)
• Nederland (Nederlands)
• Sverige (Svenska)
• United Kingdom (English)
• All other countries (English)

Asia Pacific

• Australia (English)
• India (English)
• Malaysia (English)
• ประเทศไทย (ไทย)

© Copyright 2024 Salesforce, Inc. All rights reserved.  Various trademarks held by their respective owners. Salesforce, Inc. Salesforce Tower, 415 Mission Street, 3rd Floor, San Francisco, CA 94105, United States

• How It Works
• Browse Contracts
• Login to Buy Sourcewell
• View Solicitations
• Cooperative Purchasing
• Services & Programs

Better Health Collective Awards Contract to Blue Cross and Blue Shield of Minnesota

New partnership aims to offer better rate stability and innovative health plan benefits.

The Better Health Collective is thrilled to announce its new partnership with Blue Cross and Blue Shield of Minnesota (Blue Cross) which will bring its public entity members greater rate stability, increased transparency, and more choice. Effective January 1, 2025 ,  Blue Cross will serve as the Collective’s health plan administrator for all groups with January renewals. Groups with July renewals will start with Blue Cross on July 1, 2025. The four-year contract introduces an innovative plan design and provides access to an extensive network of health care providers.

 “I am the most excited about bringing the strength of the Blue Cross organization to our 6,000+ members,” said Better Health Collective Board of Trustees Chairperson, Scott Veronen. “Blue Cross is a leader in the health insurance industry, and we are very excited to partner with them. Blue Cross provides a cutting-edge approach to health care which will greatly benefit our members.”   

A rigorous selection process

Every four years, the Better Health Collective, which is sponsored and serviced by Sourcewell, conducts a Request For Proposal (RFP) for a health plan administrator to meet the evolving needs of its members. Blue Cross was awarded the contract following a meticulous, three-month solicitation process.

“We went through a very rigorous RFP process with three strong responses from three great companies,” Veronen shared. “The scoring of the RFPs was very close with Blue Cross coming out on top.”

The RFP evaluation committee, made up of Sourcewell risk management specialists and three Collective members, evaluated three within-scope proposals. Key assessment criteria included affordability, innovation, transparency, and collaboration. An outside actuarial firm also reviewed each proposal, providing insights for an impartial, strategic decision.

 “This RFP process ensures the best care and costs for our members,” Veronen added. “I would also like to thank HealthPartners for the many years of partnership, and the care we provided to our members through this partnership.” HealthPartners previously served as the Collective’s health plan administrator.

Expanding wellness while ensuring continuity

Blue Cross is set to further empower schools, unions, and other public entities to cultivate a culture of wellness. In addition to comprehensive insurance coverage, members will have access to programs for mental health, chronic disease prevention, and other initiatives designed to support healthier living.

One standout feature of the new partnership is Coupe Health, a leading solution in health plan design. Coupe Health offers end users greater control and price certainty over health care choices. Using the Coupe Health mobile app or online portal, users can find health care facilities and providers, and see the cost of medical services upfront. This simplifies the search for care and empowers individuals to find and select low-cost, high-quality care.

 While the health plan administrator is changing, Better Health Collective members will retain their current insurance plans with minimal administrative impact on benefits administrators. Plan components will remain largely the same, including billing, Smart Plans, Health Source Solutions, Progyny, Omada, and the WellRight portal. E nrolled members will gain access to a larger network of care providers and specialists, both in and outside of Minnesota.

About the Better Health Collective

The Better Health Collective, an independent, state-certified government organization, provides high-quality group health insurance solutions to public entities in Minnesota. Members receive comprehensive health coverage that offers rate stability and compliance, while their employees benefit from affordability, transparency, and choice. The Better Health Collective is open to Minnesota public entities with more than 25 enrolled employees. To learn more, visit the Better Health Collective online or contact your broker.

California Bar Pauses $1.5 Million Kaplan Exam Contract Plan

By Maia Spoto

The California State Bar delayed pitching a new licensing exam to its governing body on Thursday, saying the plan, which could slash the admissions fund’s deficit, needs more time to take shape.

The state bar had pitched a $1.475 million, five-year contract with Kaplan North America LLC to replace the Multistate Bar Exam with a different, “cost-effective” exam. Crafting new questions would enable the bar to administer the licensing test remotely or at small, vendor-owned test centers, saving between roughly $2.8 million and $4.2 million annually starting in 2025.

“Given the import of the issues, I really think it is ...

Learn more about Bloomberg Law or Log In to keep reading:

Learn about bloomberg law.

AI-powered legal analytics, workflow tools and premium legal & business news.

Already a subscriber?

Log in to keep reading or access research tools.

• My View My View
• Following Following
• Saved Saved

South Korea announces $19 billion support package for chip industry

• Medium Text

Sign up here.

Reporting by Jack Kim and Heekyong Yang; Additional reporting by Hyonhee Shin, Ju-min Park; Editing by Ed Davies, Sonali Paul & Shri Navaratnam

Our Standards: The Thomson Reuters Trust Principles. New Tab , opens new tab

Technology Chevron

Malaysia targets over $100 bln in semiconductor industry investment.

Malaysia is targeting at least 500 billion ringgit ($107 billion) in investment for its semiconductor industry, Prime Minister Anwar Ibrahim said on Tuesday, as the Southeast Asian country looks to boost its position in the global supply chain.

German climate technology startup Cloover has raised $114 million in debt and equity in a seed funding round led by Chris Sacca's Lowercarbon Capital, Cloover's co-chief executive told Reuters.

Social Security's problems aren't going away: What that means for your benefits and taxes

Social Security's funding problems haven't disappeared despite the lack of serious public debate of late, even in a presidential election year. The day of reckoning continues to draw near, as trustees for the program described in their latest annual update released this month.

Higher taxes, benefit cuts, or a combination of both loom in a future scenario that is no longer all that distant. Congress still has time to make fixes to shore up the retirement system but hasn't shown any such resolve. Here are answers to six key questions on what might happen:

The latest projection shows Social Security’s reserves will run out in 2033. What does that mean?

The Social Security system has two trust funds that hold surplus money accumulated in prior years — one for Old Age and Survivors Insurance and one for Disability Insurance. The retirement-focused OASI fund will be depleted by 2033, according to the latest estimate by Social Security's trustees . The much smaller DI program isn’t expected to run out and combining the two funds would delay their depletion to 2035, noted the Center for Retirement Research at Boston College in a new analysis . But combining the two also would require a change in the law, which is unlikely, making 2033 the relevant year.

The trust funds are U.S. Treasury accounts holding accumulated surpluses , which are expected to run dry eventually. That's nothing new. However, "Whereas we used to have 68 years to figure out how to avoid depletion," the Boston College report said, "we now have nine years.”

Will Social Security eventually go broke?

No, but the retirees and others who rely on Social Security could be seriously pinched. If Congress doesn't shore up the trust funds or make other fixes, the Social Security Administration would need to cut benefits by about 21% to match the level of payroll taxes and other revenue flowing in at that time.

“Depletion of the trust fund does not mean that OASI has run out of money,” stated the Boston College report. "At the time of the depletion, payroll tax revenues (would) keep rolling in and can cover 79% of currently legislated benefits."

Would retirees have trouble making ends meet?

Many would. For a typical person at age 65, Social Security benefits currently cover about 36% of pre-retirement earnings. That would drop to 29%, “a level not seen since the 1950s,” according to the Boston College analysis.

Social Security was never intended to pay for everyone’s full expenses in retirement — that’s where personal savings, home equity, workplace 401(k) plans, and other assets come in. Millions of current and future retirees could absorb a benefits cut, but those who rely on Social Security for most or all of their income could drift closer to poverty levels. Congress might shield these people by shifting most of the benefit cuts toward more affluent recipients.

What about investing some trust-fund assets in the stock market?

That proposal has been debated for decades and, in retrospect, could have been a wise option, given the stock market's record of generating annual gains of 10% to 11% over the long haul. However, there are also valid concerns, such as the potential for politicians to decide which stocks could be chosen for investment and the possibility that Social Security's huge cash inflows and outflows could distort market trading.

Also, the market can be painfully volatile at times, but stocks generally have stood the test of time. “Indeed, if Social Security had begun investing 40% of its assets in equities in 1984 or even 1997, the trust fund would not be running out of money today,” according to the Boston College report.

Stocks remain a possibility, "But to take advantage of this option, Congress has to act sooner rather than later before the trust fund hits zero," the analysis said. Currently, the reserves are worth $2.6 trillion.

What other problems have resulted from Congress' failure to act?

The policy of doing nothing “undermines Americans’ confidence in the backbone of our retirement system and causes some to claim their benefits early, hoping that those on the rolls may be spared future cuts," the Boston College report said. Worse, inaction will result in more severe, future benefit cuts while spreading the pain less equitably. The longer the delay, the more the burdens of tax increases or benefit cuts fall on Millennials and younger generations.

Both political parties largely have shied away from making the tough decisions to fix the problem, as have presidential contenders Donald Trump and Joe Biden. Yet pledges not to touch the system are akin to endorsing future benefit cuts, noted Maya MacGuineas, president of the Committee for a Responsible Federal Budget.

What are realistic fixes for the program?

Other options for closing the gap range from raising the retirement age to slowing cost-of-living adjustments to subjecting more of the compensation of high earners to payroll taxes. Ultimately, the choices come down to some combination of higher taxes and benefit cuts. Workers and employers already pay a combined 12.4% to support Social Security (plus 2.9% for Medicare), and even more might be needed.

How much more? “If payroll taxes were raised immediately by 3.5 percentage points — 1.75 percentage points each for the employee and the employer— the government could pay scheduled benefits through 2098, with a one-year reserve at the end," predicts the Boston College analysis.

Reach the writer at [email protected].