Most owners have a number. Very few have decided what kind of number it is, and fewer still have thought about what happens on the other side of it.
Both of those turn out to matter more than the figure itself. The first determines what company you should be building. The second determines whether reaching it feels like anything.
First: what kind of number is it?
An owner told me their number was $300,000. Reasonable, specific and completely ambiguous until you ask one follow-up.
Is that $300,000 of taxable income to you? Or $300,000 in your hand, with the business also retaining enough to keep growing?
Those are different targets. The second one, once you account for tax and for the retained earnings the growth requires, is closer to $475,000 of total economic value. Same stated number, substantially different company.
This is not pedantry. It changes what you build.
| If your number is… | Then you are building… |
|---|---|
| Money in your hand now | A business built to pay you. Less put back in, bigger owner draw, slower growth. Legitimate |
| Money now plus growth | A business built to compound. More put back in, payoff later, worth more in the end |
| What it sells for | A different thing again. Whether it runs without you matters more than what it pays you today |
An owner who wants money now but is unknowingly building to sell will feel poor for years. An owner who wants to sell but is actually building to pay themselves will reach the end with good cash flow and nothing anyone wants to buy.
Be specific about the components
The useful version of “my number” separates:
- Salary or draw. What actually reaches your household
- Distributions. Irregular, on top
- Retained earnings. What stays in to fund growth
- Taxable income. Often larger than what you received, which is the surprise that catches owners who reinvest
- Enterprise value. What the thing is worth, which for most owner-dependent businesses is much less than the multiple they have read about
Write a figure against each. The exercise takes twenty minutes and most owners have never done it, which means they are working toward a number that has never been defined well enough to plan against.
Second: what would the business have to look like?
Once the number has components, work backwards.
Not today’s business with more revenue in it. The actual company at that size: the headcount, the management layer, the facility, the benefits load, the marketing spend that generates the volume, and the margin by service type that makes the arithmetic work.
Build that budget. It will not be accurate. Best case around 93 to 95%, worst case around 75%, but directionally it will show you which parts of the current structure have to be replaced rather than scaled.
Two things usually fall out.
The number is closer than it felt, because the owner had been mentally pricing it as a multiple of effort rather than a change in structure.
Or the number requires a company the owner does not want to run. That is an extremely useful finding and it arrives far too late for most people. Some numbers are only reachable through a business with fifty employees and a management layer, and plenty of owners would genuinely rather have less money and a company they enjoy. Discovering that before you spend five years is worth a great deal.
Third, and the one people skip: what happens after?
Here is the part I would most encourage you to think about in advance.
Whatever your number is, the way you answer “who do I want to be” changes once you reach it.
Most of the answers people give before they hit their number come from not having hit it. Security. Not worrying about money the way they have always worried about money. Proving something to somebody. Those are real motivations and they carry a lot of weight, right up until the moment they are satisfied, at which point they stop providing any direction at all.
Owners who have not thought about this often find the achievement oddly flat. They hit the number, feel briefly relieved and then discover the thing that got them out of bed was the gap rather than the destination. So they set a larger number, because that restores the gap. That works, and it is also how people end up at sixty having done the same thing four times.
The exercise
Take money out of the picture and answer these:
- What would you spend your time doing if the business no longer required your daily involvement?
- What should the business make possible in your life that is not possible today?
- Who do you want to become through building it?
- What are you ultimately trying to steward: money, employees, customers, a community or something larger?
Those questions are hard in a specific way: they are unanswerable while you are inside the grind, and they are the only thing that gives the grind a shape. In my experience an owner who can answer them makes noticeably better decisions about which opportunities to take, because they have something to evaluate against besides revenue.
On money itself
A short digression, because it is underneath all of this.
Money is the lowest-order stand-in for value. It is a contract stating that it represents something else, and on its own it is fairly meaningless. It is enormously useful and it is not the thing.
Having it amplifies whoever you already are. It does not make people generous or greedy. It magnifies what is there and removes whatever was previously stopping you. The patient person becomes more patient because they can afford to wait. The anxious person becomes more anxious because there is now more to lose.
Which turns the question around. Rather than how much do I want, the more useful version is: who do I need to become to be worthy of stewarding that responsibility?
That question is available now, at your current revenue, and working on it does not require hitting any number first. It is also, in my experience, what determines whether the money turns out to be worth having.
Why owners avoid this
Two reasons, and both are understandable.
It feels indulgent. There is a payroll to make on Friday. Sitting with “who am I becoming” feels like a luxury for people whose problems are already solved. But the sequencing runs the other way: an owner without a defined destination takes on work, hires people and enters markets on the basis of whichever opportunity is loudest, and then spends years unwinding decisions that were never evaluated against anything.
The answer might require a change you do not want to make. If the honest answer is that the business you have will not produce the life you want, you now have to do something about it. Not asking preserves the option of not knowing.
That is a real cost and it is worth naming. Getting clear about your number sometimes ends with the conclusion that the current business is the wrong vehicle. That is painful, and it is much cheaper at year four than at year twelve.
The ladder problem
One more thing worth knowing before you set the number.
Owners sometimes look at a well-paid job they left, or one they could return to, and calculate that they would be further ahead financially by having stayed. Occasionally that arithmetic is correct.
It usually misses something. When you climb a ladder, looking down and choosing to go back gets harder the higher you get, and most people who plan to accumulate first and build later do not build later. The comfort compounds faster than the savings do.
So the comparison is not “the money I would have” against “the money I have.” It is against “the version of that plan I would actually have executed,” which for most people is considerably less ambitious than the one they imagine.
I am not arguing everyone should own a business. I am arguing that the counterfactual people use to evaluate the decision is usually more flattering than the reality would have been.
Do this
- Write the number, then split it: salary, distributions, retained earnings, taxable income, enterprise value
- Build the budget for the business at that size, and see whether you want to run it
- Answer the four questions with money removed
- Write down what you would do the day after you reach it. If you cannot, the number is incomplete
- Revisit annually. The number moves as your life does, and that is not a failure of commitment
Frequently asked
Is it wrong to just want to make money? No, and I would not talk anyone out of it. Wanting resources is sensible, because it is easier to be useful with them than without. The question is only whether you have decided what the money is for, because that decision gets made either deliberately or by default.
What if I do not know what I want? Common, and it is a starting condition rather than a disqualification. Start with what you want to stop: which parts of the current week you would remove if you could. That is usually easier to answer than what you want to add, and it points in the same direction.
Should my number be revenue or profit? Neither, on its own. Revenue is a vanity target and profit is closer but still incomplete. What you want is a personal figure: what reaches your household and what accumulates in the asset, and then the revenue that produces it.
How do I know if my number is realistic? Build the target-size budget. If your current structure can plausibly get there, it is realistic. If it obviously cannot and you are not funding the gap, it is a wish. See is your margin healthy, or are you under-investing.
What if my partner’s number is different from mine? Then that is the more important conversation and it should happen before the business plan. Owners routinely aim at a figure their household has never agreed to, and discover the mismatch at the worst possible moment.
How often should I revisit this? Annually, and after anything significant: a child, a health event, a large offer. Those change the answer more than a good quarter does.
This is often the conversation underneath the one an owner books. The presenting problem is cash or hiring, and the actual question is what the business is for. Here is how I work.