Jim Duffy: Building any successful business deserves an exit pay-day

Social enterpreneurs are not saints, they have bills to pay too, so they should be entitled to walk away with a reward says Jim Duffy

Social entrepreneurs are creating something good for the world but we must not forget that their businesses are just that  businesses  and making money and securing a future are key

This reaffirms that many founder entrepreneur types believe that business can be a force for good as well as profit.

But social entrepreneurship in Scotland is a misunderstood beast. The perception that social entrepreneurs are saintly types, working in a “charitable” fashion, while not ensuring healthy margins, surpluses and profits is plain wrong. It’s time to change this perception and catch up with the rest of the world.

Running a social enterprise is an admirable pastime for many and makes them feel good. The explosion in social entrepreneurship makes a powerful statement that people want more than “just money” from the business that they start. But things change. Having put say five to ten years into building your business – and that is what it is, a business – the social entrepreneur needs to leave with something other than brownie points for heaven or a good feeling. It’s time for social entrepreneurs to catch a break and stick some hay in the barn so they can go on to do other great things.

We live in very different times. The Gen Y’s and Gen Zer’s of this new world are the new social generation. It’s not all about university, a three-bedroom detached in a nice area, two cars and two kids, pensions and working towards retirement. Oh no, they want more. Millennial entrepreneurs are part of the rise in social entrepreneurship. They seek to integrate business techniques and nous into solving social problems, whether it be homelessness, economic development or ice cream aka Ben and Jerrys. Some may even look down their noses at the Gen Y’s and Zer’s who are struggling to define their passion as they want to find a purpose in their careers. And just where did that come from? This new view, however, has resulted in many of them being hesitant to accept a corporate desk gig and indeed leaving these well-paid numbers to go out into the world and start their own ventures. This is a generation that yearns to connect with others, while building new value into the businesses they start. But, and it’s a big but, if they do not think long term about exiting these social businesses whether they be social enterprises, B Corps or Community Interest Companies [CIC’s], then they will come unstuck eventually.

Anyone who manages to achieve years in running any business successfully should be rewarded when it comes to exit it or selling it on. Our for-profit entrepreneurs, whether they be oil and gas entrepreneurs, tech entrepreneurs or foodie entrepreneurs, all look to come out the other end with enough dough to last them for a few years. Only last week, I was speaking to a young guy who said that he wanted to exit in five years with enough cash to never have to work again. Yes, that would be exit and retire at age 32. Go figure that one, those of you who are half way through to your pension that you will get aged 60! It’s a big difference in thinking.

So too, I would argue, should social entrepreneurs get that exit. Their life circumstances change all the time as with “normal” human beings. They will have families to support, get sick, need to move house and buy cars etc. So why, just because they have decided to create a socially minded venture, should they not also get a big payday for all their efforts?

I can tell you one thing that many entrepreneurs all know only too well. When you sell a business – and I’ve sold four over my entrepreneurial career – it’s a dark and lonely place the next day when you have no business anymore. Half a decade of thinking about your “baby” all day, every day just evaporates and you have nothing. You have to start again at something else. That is why an exit is so important, to derive value from what you did. You created value in the business and value for others as well as jobs and taxes and all that goes with it.

So, having gone through this myself, I would urge all social entrepreneurs to plan it and have some form of understanding of what will happen in the future when you hang up your spurs.

Social entrepreneurship should be embraced whole-heartedly and not just as a trend or demographic. There is more to business than just money. Social entrepreneurship adds that purpose for many seeking more in life. But our role is to make sure that they build in their exit from the start. After all, the word entrepreneur imbues creating value that others will buy and making money from that. What we don’t want is a whole generation of Gen Y’s and Gen Zer’s having done great work only to have no dough, no pension and a poor older lifestyle when it comes.

We all need long-term security and a realisation that having an exit for business builders is no bad thing for our social entrepreneurs who have worked hard for it.