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# The Entrepreneur’s Freedom Number: Securing Wealth Beyond Your Business
- URL: https://blog.trevorstevenson-platt.com/the-entrepreneurs-freedom-number-securing-wealth-beyond-your-business/
- Published: 2025-02-12T11:41:33.000Z
- Updated: 2025-09-03T09:46:49.000Z
- Description: Imagine this: You meet an investor who has a £5 million portfolio. But instead of a well-diversified mix of stocks, bonds, and property…
- Author: Trevor Stevenson-Platt
- Tags: #Migrated-1756892778085, #Import 2025-09-03 09:46, Exit Planning

Imagine this: You meet an investor who has a £5 million portfolio. But instead of a well-diversified mix of stocks, bonds, and property, every single pound is tied up in **one stock**. You’d call it reckless. Any financial adviser would tell them to diversify immediately.

Yet, most entrepreneurs make this exact mistake. Their entire net worth is locked in a single, illiquid asset: their business. They are **paper rich but cash poor**, sitting on a fortune they can’t easily access. Worse still, **80% of businesses that go to market don’t sell**. And even if they do, the process can take years.

So here’s the uncomfortable truth: **Your business is not your financial freedom plan.**

### What Is Your Freedom Number?

Your **Freedom Number** is the amount of liquid wealth you need to walk away from work permanently, should you choose to. To calculate it, follow these steps:

**Determine Your Annual Income Requirement**

- How much do you need per year to maintain your lifestyle?
- Let’s say it’s £300,000.

**Apply the Safe Withdrawal Rate**

- Financial planners use the **4% Rule**, meaning you can safely withdraw **4% of your assets annually** without running out of money.

**Calculate Your Freedom Number**

- Take your annual income requirement and multiply by 25.
- £300,000 x 25 = **£7.5 million**.

If you think selling your business for £7.5 million will get you there, think again. **After taxes, fees, and transaction costs, you may walk away with only £5.25 million**. Doing a quick calculation on the back of a napkin is useful for getting a rough idea, but in the exit planning process, we go into thorough detail to ensure this number is robustly defined. That’s close, but still requires careful planning to ensure long-term financial security. Most entrepreneurs will only exit their business once — there are no second chances to get it right. This is why a thorough and strategic exit planning process is critical to maximising value and securing financial independence.

### Why Having 90% of Your Wealth in One Asset Is Dangerous

Most business owners hold onto their company too long, believing it’s their best investment. But let’s look at the risks:

- **Market Disruptions** — A new competitor, a recession, or an industry shift could halve your business value overnight.
- **Personal Health Issues** — If something happens to you, is your business still sellable?
- **M&A Reality Check** — Only **20% of businesses that go to market actually sell**.

By contrast, if you had £5 million in stocks, you could liquidate it with a click. **Your business? It could take between 2–5 years to sell — if at all.**

### Diversification: The Smart Entrepreneur’s Strategy

Wealthy entrepreneurs don’t wait until the last minute to diversify. They use their business as a **wealth creation engine**, not a financial prison. Here’s how:

**Start Extracting Liquidity Early**

- Pay yourself well. Build up cash reserves **outside** the business.
- Invest in **income-producing assets** like property and stocks.

**Strategic Wealth Allocation**

- Don’t reinvest **everything** back into growth.
- Allocate some wealth into **liquid, diversified investments**.

**Exit Planning as a Business Strategy**

- Your business should always be **sale-ready**.
- Buyers pay **premiums** for businesses that can run without the founder.

### The Best Time to Start Is Now

One day, you’ll want — or need — to sell your business. If you haven’t planned ahead, you may find yourself **too wealthy to walk away but too tied up to cash out**.

**Exit planning isn’t just about selling. It’s about securing your financial future.**