Know Your Number: Choose the Life You Want
Are you actually less financially savvy than your own employees?
They’re all working with an end in mind — retirement. But are you?
This article is about a popular phrase in financial circles called Know Your Number, and it’s one every owner should understand.
Most owners spend years asking: How do I grow the business? How do I make more profit? What’s it worth? When could I sell? But the real question is what are you actually working towards? Even if you have no plans to sell, working with an end in mind is simply good business. No one wants to work their whole life and die on their own in the office one day after everyone else has gone home.
How much is enough?
How much do you actually need to live the life you want after you sell up or step away from your business, and not worry that the money might run out?
That figure is your number. With some help you can find out what that number is. And if you don’t know your number, what are you working towards?
When there’s no finish line
You can spend years increasing turnover, improving margins and building what appears to be a very successful company. But eventually all of those business numbers need to translate into one thing: will the money you get on exit be enough to fund the life you want?
That is where many business owners haven’t done the maths. Have you?
The safest option feels like carrying on. Another year of profit. Another year of saving. Another year of increasing the value of the business, just in case.
Underneath it all is the same unanswered question: ⚠️ What if I haven’t got enough?
Knowing your number changes the conversation
Say your number is £2m and your business could already sell for £3m — suddenly you have room to plan. Everyone’s number is different: it depends on living costs, holidays, family, inflation, pensions, tax and later-life care.
Say your pensions, investments and property are worth £750k against a £2m need — that’s a £1.25m gap. Now the question becomes genuinely useful: what does the business need to be worth?
From there you can work backwards — what profit supports that valuation, what has to change, how long will it take? Growth suddenly has a purpose, rather than just feeling like bigger is better.
Your exit plan has two sides
Most exit-planning conversations focus only on the business:
- Is it profitable?
- Can it run without you?
- Is the team strong?
- Would someone want to buy it?
That’s only half the plan.
The other half is you — what you want life to look like afterwards, when you want to stop, what income you’ll need, whether you want to help family, travel, or leave an estate. The business isn’t really the destination; the life it lets you live is.
This is where forecasting gets personal. A good cash-flow model takes your wealth, expected sale proceeds, pensions and investments, and tests them against the life you want, answering one simple question: will your money last?
💡 Finding out at 53 that your money could run out at 74 is useful — you still have time to save more, adjust your strategy, or grow the business’s value. Finding it out at 73 is a disaster.
What’s the business actually worth?
A retirement plan built on an unrealistic valuation isn’t a plan, it’s a hope.
Your financial planner can tell you how much you need. Your Accountant or FD can tell you what the business could realistically be worth, and what needs to change to get there.
Those two conversations need to connect. Instead of “grow the business”, you can ask: what needs to happen over the next five years to put another £1m in my hands? That might mean better margins, less dependence on you personally, less customer concentration, better management information, or tax planning well before a sale.
Don’t wait until you want to sell
Most of what drives the value of your business can take years to fix: reducing owner-dependence, building a management team, widening the customer base, cleaning up financial records.
That’s why exit planning should start years before the intended exit, even with no plans to leave soon. It isn’t about leaving tomorrow — it’s about creating options, and options are valuable.
There are three ways this story can end:
- Keep working and saving indefinitely, afraid it’s never quite enough
- Sell too early or for too little, and discover years later the money’s running out faster than planned
- Or work out your number well in advance, build the business to meet it, and choose when to leave on your own terms
What really matters is working with an end in mind, even if you have absolutely no intention of selling any time soon, because that’s simply good business.
So, What Are You Actually Working Towards?
Before setting your next sales target, ask a more basic question:
✅ Do you know how much you’ll need when you eventually leave?
✅ What your existing assets are likely to provide?
✅ What your business therefore needs to be worth?
✅ And what needs to change between now and then to make that happen?
Without those answers, you can build a hugely successful business and still have no idea whether you’ve achieved what you actually wanted from it. It’s a bit like setting off in the car with the satnav switched off — you might drive fast and cover plenty of miles, but you have no idea whether you’re any closer to where you actually want to be.
Key takeaway
Don’t just ask how big your business can be. Ask how big it actually needs to be.
Work out how much money you need to live the life you want, understand what your existing wealth will provide, and calculate what the business needs to contribute. Then build your five-year plan around closing that gap.
💡 Know your number. Know your destination. Then build the business that gets you there.
Don’t wait for the moment when you’ve had enough — start on your plan now, because it’s simply good business practice.
If this strikes a chord, email me at Josef@MrBlueski.co.uk or book a meeting.
#ExitPlanning #KnowYourNumber #BusinessValue #SuccessionPlanning #VFD #CFO
