By Ross Martin, Accountancy Director at Hive Business.
I have more than one friend who got caught up in the rat race, managed to scrape together enough money to buy a flat, and ended up with a circa £300k windfall. That’s probably £295k more than I made on my flat, but then I don’t live in London.
It seems there’s a division of wealth according to circumstances, certainly by geography, but also I think it’s fair to say more generally, as a function of the randomness of life.
These friends of mine who happened to be in the big smoke weren’t driven to buy flats by entrepreneurial vision, or by any particular cognitive process at all. At least one of them thought the flat he was buying was ridiculously overpriced and he was making a mistake. But buying a property is just something that you do as soon as you can do it, wherever you live, and so he went ahead.
His wealth was contingent on circumstances beyond his control. Something similar has happened to goodwill prices in dentistry for a while now, and also FTSE share gains over the past year.
A statue of Cecil Rhodes, admired in his time as the quintessential thrusting British imperialist, was nearly removed from the Oxford University campus last year for the same reason that his contemporaries loved him — his imperialism.
Rhodes said: “To be born English is to win first prize in the lottery of life.” Perhaps not so much any more, but it just shows you can be in the right place at the wrong time. You can miss the boat in all sorts of ways.
It’s quite easy to think of things to feel fortunate about, but for me discovering that my friends had made buckets of money by accident took some pleasure away from what I had worked hard to achieve. There’s probably a German word for how it felt when, for a horrible nanosecond there, I struggled with their good fortune.
Maybe it’s my easygoing Cornish nature, but I quickly became happy for them and realised that it’s OK, because you will always encounter elements outside your control in life. That doesn’t mean you can’t at least grab hold of things in your power and make the best of them.
I suspect this is the conclusion that the fresh generation of practice owners must also have arrived at, watching their older counterparts coin it through 400% rises in practice valuations as they exit the game (apparently goodwill prices used to be 30% of turnover), while the newbies leverage themselves to the hilt just to get on the pitch.
No, life isn’t fair, but you’ll do OK as long as you don’t expect it to be. Just try not to let your envy, aspirations or fixations make you do something silly, like short-cutting and not doing your due diligence. It happened to a lot of people in the dotcom bubble and the London house boom.
If you have missed the boat, all you can do is assess each of your decisions on its merits at the time. Buying a practice at 140% of its value and assuming that if you work hard you will get what you deserve isn’t the answer, it’s probably going to make things worse. But there are other options, good options.
Assuming that life is fair is described as a thinking error in cognitive behavioural therapy because it sows unhappiness. Your best bet is to stay real, be aware and focus on making good decisions with the information available. So don’t follow the herd, and let us know if you need help appraising your next move or increasing your success if you’ve already made the leap. Call 01872 300232 or email us at hello@hivebusiness.co.uk.
