What’s your number? That’s the question I was asked when I first thought about selling my company. Let me explain what that means. Imagine you could sell your business tomorrow. What price would you need to get in order to finance the lifestyle you have now – or the one you aspire to? If you sold a business for £1m and invested that money, you’d be doing well to get a return of around 5% a year on that sum. So you’re looking at £50,000 a year. Or you could be patient, take your time, build you business and hope to sell in five or ten years time for many times that amount. If you invested £10m wisely the annual interest could be around £500,000, for example. The point is to know your number – and then work back from there. And remember – the number is the annual amount you need to live the lifestyle you want.
Never feel embarrassed to say it’s the money that motivates you if that’s why you get out of bed in the morning. It’s OK to know that about yourself. I enjoy building businesses and going to work and because of that I didn’t sell up. But everyone’s different. When you’re working late into the night to get a business off the ground, using a desk you’ve borrowed from a mate, selling up for a huge amount can seem like a pipedream. But knowing your number from the outset helps to give you a clear idea about where you want to get to. It also means you are pursuing the same aim as your partners in the business, if you have them. If your partner has a different number from you it can spell disaster. It means you want very different things – and that means you will almost inevitably fall out at some stage about when to sell, how much to sell for or whether to sell at all.