Built to Sell Chapter 8: What Is Your Business Actually Worth?

Chapter 8 is called “The Number.” And it’s about that one question every business owner secretly thinks about but rarely says out loud. How much is my business actually worth?

Alex comes back from Ted’s beach house. He spent the weekend planning, doing the math, thinking about his future. He had that sealed envelope from Ted with the question inside. Now he has an answer. He wants $5 million.

Saying the Number Out Loud

Alex walks into Ted’s office to return the keys. Ted asks him directly: “What’s your number?”

Alex starts rambling. He talks about how he calculated it. He mentions the work he’s put in over the years, how much more there is to do, his revenue goals. He’s nervous. This is one of those moments where you realize how personal business is. This is not just about math. It’s about what you think your life’s work is worth.

Then he finally says it. Five million dollars.

Ted doesn’t react. No surprise, no judgment. He just hands Alex a recipe card and tells him to write the number down, seal it in an envelope, and keep it somewhere safe. He says it will make sense later.

I liked this moment. In my career I have seen this many times. People either massively overvalue or undervalue what they built. And the number is always emotional. It’s never just math. It’s “I spent ten years on this, I missed my kids’ birthdays, I deserve at least this much.” That’s human. But buyers don’t care about your suffering. They care about cash flow.

The Business Keeps Growing

While Alex is figuring out his number, the business is actually doing well. Angie and Seamus keep selling logos. Through December they close eleven logos between them. Alex asks them to recommend salespeople from their past jobs. He hires three more reps. Now there are five salespeople total.

He also hires a new account director, Belinda Carter, away from a rental car agency. She’s organized, detail-oriented, exactly what they need. Rhina and Belinda bring on a coordinator to help with the workload. Alex goes to his old art school and recruits another designer.

So the Stapleton Agency now has five salespeople, two account directors, two designers, one coordinator, and Olga running the office. That is a real company. Not just Alex doing everything himself like in Chapter 1.

But here’s the thing. Growth creates its own problems.

Growing Pains Are Real

Angie shows up one morning and tells Alex she’s stretched thin. The new salespeople have questions all the time. She wants to help them, but her own sales numbers are dropping. Seamus feels the same way.

She puts it bluntly: “You need to decide if you want me to sell or manage. I can’t do both.”

This is such a common problem. I saw it in every tech company I worked at. Your best individual contributor gets promoted to manager because they’re good at their job. Then they stop being good at their job because now they’re managing instead of doing. And if you don’t handle this transition properly, you lose them.

Ted’s Advice on Building a Management Team

At their next Tuesday meeting, Alex tells Ted about the growing pains. Ted is not worried. He’s actually happy.

“It’s about time you built a management team,” Ted says.

Here’s the logic. If Alex wants to sell the business, he needs to prove it can run without him. A buyer wants to see that there are managers who will stick around after the sale. Otherwise they’re buying a company that falls apart the day Alex walks out.

Alex asks if he should bring in outside managers. Ted says no. Angie, Rhina, and Chris are already acting as managers. Just make it official.

Then comes the money question. How do you pay managers without giving away equity?

The Long-Term Incentive Plan

Alex’s first instinct is to offer equity. Share ownership. That’s what you hear about all the time, right? Stock options, equity splits, vesting schedules.

Ted shuts this down fast. Equity in a small private company is messy. It’s complicated to set up. It causes headaches. And here’s the problem: equity is only worth something if someone eventually buys those shares. If Alex never sells the company, or if it never goes public, those shares are basically worthless paper.

Instead, Ted describes a long-term incentive plan he used in his own businesses. It works like this:

1. Set personal performance targets for each manager.
2. Pay them a bonus at the end of the year for hitting those targets.
3. Put the same bonus amount into a special pool earmarked for them.
4. After three years, they can start withdrawing one-third of the pool each year.

So the pool grows every year based on their performance. But they can’t touch the extra money for three years. If they leave the company, they walk away from three years’ worth of bonuses sitting in that pool.

This is clever. It rewards both performance and loyalty. It keeps your best people around without the legal nightmare of distributing equity. And from the employee’s perspective, a clear cash bonus plan is actually better than owning a tiny percentage of a company that may never get sold.

I worked in companies that did both approaches. Equity in a small company is stressful for everyone. You end up with arguments about valuation, about dilution, about what happens if someone leaves. A simple bonus pool? Everyone understands it. Everyone can calculate what they’re getting. No lawyers needed.

Alex Makes It Official

Alex promotes all three. Angie becomes VP of Sales. Rhina becomes VP of Client Services. Chris becomes VP and Creative Director. He gives them each a 7% raise and introduces the long-term incentive plan Ted described.

He’s honest with them. They’re still a small company. They still need to do their regular jobs. The promotion recognizes the extra management work they’re already doing.

The chapter ends on a quiet, satisfying note. Alex leaves the office on Friday and realizes what he’s built. A standardized process that others can deliver. A sales engine that produces cash. A management team with incentives to stay.

He’s close to having a sellable business.

My Take

This chapter is about two things that most business owners get wrong.

First, the number. Most people pick a number based on emotion, not market reality. “I want $5 million” is a wish, not a valuation. Ted doesn’t correct Alex here. He just tells him to write it down. The lesson will come later when Alex sees what buyers actually offer.

Second, the management team problem. Too many founders think they need to either do everything themselves or hire expensive outside executives. The answer is usually in between. Promote from within, give clear titles, create real incentives. Your Angies and Rhinas already know the business. They just need the authority and the motivation.

The incentive plan Ted describes is something I wish more small companies would adopt. Equity sounds exciting but it creates problems that take years to untangle. A well-designed bonus pool does the same thing, keeps people motivated and loyal, without the complexity.

And that last line, “He was close to having a sellable business,” is the payoff for everything Alex has been building since Chapter 3. He went from a one-man show to a company with systems, salespeople, and managers. That’s the transformation. That’s what makes a business worth buying.

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