Exit Planning for Social Enterprise Founders and For-purpose Businesses
Introduction
The social enterprise and for-purpose business sector continues to take on and beat everyday problems. In solving those problems and creating employment, it is also creating businesses of value for founders.
But how many founders started out thinking they were creating a business of value? And how many have thought about their exit plan?
Sector Momentum
A common predictor of success in any for-profit business is the extent to which the entrepreneur:
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Identifies a customer problem
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Offers a viable solution
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Validates sufficient demand to build a sustainable business
The social enterprise and for-purpose business (SEFB) sector is full of founders doing exactly that.
Over the past 10–15 years, momentum has grown as individuals and small teams have taken on problems they connect with and want to solve.
“Social enterprise in Australia is on the rise. We are well on the way to seeing social enterprise as part of the mainstream...”
— David Brookes, Managing Director, Social Traders (2016)
How Many Social Enterprises Are There?
The FASES 2016 report (Social Traders, Centre for Social Impact, Swinburne University of Technology) estimated at least 20,000 social enterprises in Australia, with one-third between two and five years old.
Growth remains difficult to measure as many social enterprises operate within not-for-profits or other hybrid structures.
Global Drivers
Broader trends such as the UN Sustainable Development Goals (SDGs) and easier business startup conditions continue to fuel growth in the sector.
Operating Challenges
As more SEFBs mature, their founders will face familiar small business challenges:
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Securing funding
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Managing founder burnout
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Facing competition
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Resetting strategy
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Deciding whether to scale
Exit Planning for Social Enterprise Founders
Most founders don’t think about their exit plan until an external event forces them to. Even without formal planning, good exits are possible with the right advice and timing.
But for SEFBs, exit planning carries additional layers of complexity — tied to purpose, mission, and stakeholder expectations.
Below are four common exit pathways every SEFB founder should understand.
Four Common Exit Pathways
1. Trade Sale
A traditional sale triggered by age, health, family, or changing personal priorities.
Typical founder questions include:
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Is staying best for the business?
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Can it survive without me?
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What is the value of what I’ve created?
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Should I extract that value?
A trade sale can be a natural and legitimate step if the mission continues under new ownership.
2. Mergers & Acquisitions
Successful or fast-growing SEFBs may receive approaches from larger SEFBs, not-for-profits, corporates, or investors.
Motives often include:
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Gaining speed through acquisition
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Expanding impact or efficiency
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Strengthening CSR or brand credentials
Under this category also fall partial sales (to partners or investors) and share sales to key employees.
3. Business as a Job (BaaJ)
Some founders choose to operate with no employees — by design.
This model delivers income and purpose without the burden of scaling.
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Focus on a niche problem
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Maintain control and flexibility
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Option to scale later if desired
“Who said growth is mandatory? A ‘BaaJ’-style SEFB that provides you a job and impact is success in itself.”
BaaJ businesses should be recognised as valid and valuable forms of enterprise.
4. Closure (Liquidation)
Sometimes the best option is to close.
When finances are depleted or priorities shift, shutting down can free resources and mental energy for the next venture.
Founders who re-enter employment or start again bring valuable experience back to the sector.
Unique Challenges in Exiting a Social Enterprise
Purpose Complicates the Exit
Founders of SEFBs pursue financial and non-financial goals.
A sale can test personal integrity and attract scrutiny:
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“Am I selling out?”
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“Will stakeholders think I’m abandoning the mission?”
These are legitimate concerns. But they can be reframed.
Reframing “Selling Out”
Founders should recognise that:
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Taking risk justifies earning a reward
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A new owner can extend impact
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Staying from guilt can harm wellbeing and outcomes
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Visible, successful exits validate the entire sector
Selling does not mean betraying purpose — it can mean ensuring continuity.
Business is Personal
Many SEFBs stem from lived experience. Letting go can be harder than in a commercial venture.
The key: embed your values into people, systems, and culture so the mission outlives your tenure.
Goodwill, Multiples, and Value
SEFBs often face higher costs due to ethical sourcing or small-scale production, which can lower profit margins.
However, their brand trust, loyalty, and purpose alignment can create stronger goodwill and higher valuation multiples.
Intangibles That Drive Value
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Reputation and authenticity
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Engaged customer base
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Community partnerships
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Documented impact
Even with lower short-term profits, goodwill can increase the business multiple and total sale value.
Ten Questions for Founders Planning an Exit
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How well are you and the business positioned to continue impacting your chosen problem?
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Could a new owner better serve the purpose?
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How much personal energy do you have left?
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Is it time to tackle a new problem?
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What conditions would you place on a sale?
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Is another SEFB or NFP your natural buyer?
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Are there buyers you would not sell to?
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Could your “% of profits” or impact claims be misunderstood?
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Who are the stakeholders impacted by a sale, and how will you communicate with them?
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What message will preserve your personal reputation and integrity?
Notes and Definitions
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SEFB Sector: Refers broadly to social enterprises and for-purpose ventures, not only registered entities.
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BaaJ (Business as a Job): A term describing zero-employee businesses run consciously by founders seeking autonomy. Around 1.2 million such businesses exist in Australia (≈60% of SMEs).
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FASES 2016: Finding Australia’s Social Enterprise Sector study by Social Traders, Centre for Social Impact, and Swinburne University of Technology.
Next Steps
Considering your options or responding to an unexpected buyer approach?
Get an independent, confidential review of your exit pathways and business valuation.
All the best, Michael
References