Modified on: June 2023
This is how much you need to sell your business for
How much you need to sell your business for
How much should you sell your business for? Not an easy question, but an important one.
If you’re like most business owners, youâve been in the trenches, youâve taken risk, youâve started, built & grown your business for what may seem like forever.
But one day, it doesnât matter when, why or how, you start thinking about getting out.
Retirement? Maybe.Â Less stress/more time? Usually.Â Greater freedom? Definitely.
Well, thatâs all well and good, but before you sail off into the sunset, there are some things you need to sort out first.
What’s the end game?
Chances are, youâve been busy being busy, Â juggling life, family, work, the whole 9 yards.
If youâre like most entrepreneurs, youâll be guilty of having your head in the sand just a little bit and not seeing the bigger picture.
Your business success has provided you with a nice lifestyle, status, purpose, but what is it going to give you when you sell it?
More importantly, what does it need to give you so that you can live a good life?
Starting with the end in mind and working back from there is critical.
How much is enough?Â
Of course, you want to squeeze out as much value as possible from the asset that has taken blood, sweat and tears to build – who wouldnât?
But forget about that for a moment. Focusing on âas much as possibleâ sounds sensible, but it can lead you astray.
Instead, step back for a minute and look at the big picture. Ask yourself, what is it you want from life?
Is it the same as what youâve got now? More? Less? Do you want to help the kids through university, or perhaps with your first house?
Going through this exercise will determine how much it costs and how much you need to sell the business for.
This is just one of the 3 most important questions when it comes to retirement.
Achieving financial independence
For most people, the overarching goal is âfinancial independenceâ.
All well and good, but what does the lifestyle you want cost? Again, this is most definitely a question for you â maybe get your calculator out as hereâs a âback of a fag packetâ calculation for you:
Your number is the amount of capital you need to achieve financial independence, give or take. Yes, there are more sophisticated ways of calculating this, but let’s not overcomplicate things.
For example: if youâd be happy with Â£30k per annum, plus say an extra Â£10k per year on holidays, your annual spending = Â£40,000. Multiply this by 25 and youâve got your number (a nice around Â£1,000,000).
And of course, you should add the big âone-offsâ to your number, be it paying off the mortgage early or buying that holiday home in Spain.
So, whatâs your number?
All the best,
James Mackay, Independent Financial Adviser in Bristol
Financial Advisor Bristol and Pension Advisor Clifton
About us: Frazer James Financial Advisers is a financial advisor, based in Clifton, Bristol. As an independent financial adviser, weâre able to provide independent and unbiased financial advice. We provide independent financial advice, pension advice, investment advice, inheritance tax planning and insurance advice.
If you would like to speak to a Financial Advisor, we offer an Initial Financial Consultation without cost or commitment.Â Meetings are held either at our offices, by video or by telephone. Our telephone number is 0117 990 2602.
Frazer James Financial Advisers is located at Square Works, 17 â 18 Berkeley Square, Bristol, BS8 1HB.
This article provides information about investing, but not personal advice. If you’re not sure which investments are right for you, please request advice.
Remember that investments can go up and down in value, you may get back less than you put in.