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Mid-life crisis?
Old 03-04-2014, 12:55 AM   #1
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Mid-life crisis?

I'm a 46 yo entrepreneur, married with 3 kids 17, 13, and 9. My work can be all-consuming but is often very profitable. I got lucky with a recent project and have plenty of dough to retire. I have lots of outside interests and, thanks to this board, have an itch to try them all full time.

To be successful at my business requires my full attention - it's not something that can be turned over to a manager. To retire would mean closing the business and letting my team of 10 employees go. If I did so, it would be very difficult to re-start after more than a few months. Other than this business, I have no real skills and I would make a useless employee.

Part of me wants to jump off the cliff and try a new lifestyle, but it's a one-way trip and I wonder if this is just a phase and am I better off productively using the talents I have to continue with a business I enjoy and that will possibly generate significant future cash. I generally have a good work/life balance, but cram the "life" side into abbreviated hours. I wonder which missed opportunity will cause more regret? All of our friends work and I worry about my tendency toward laziness taking over if I have no pressing responsibilities. My father died at a young age and I want to make the most of what might be a short stay. What if my kids or wife get sick of me hanging around all the time, or am I missing out on precious time with them?

Any comments are welcome.
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Old 03-04-2014, 04:40 AM   #2
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How about selling your business and becoming a part time consultant to help similar businesses on your own schedule? Might be a decent way to make a transition.

Welcome to the board and congratulations on your success.
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Old 03-04-2014, 08:15 AM   #3
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How large is the margin of safety when you calculate whether you have enough to retire or not. There's always a problem with OneMoreYear syndrome, but you might use it to your advantage if you are also trying to decide whether to ER or not. By staying in business one more year, you build your bigger margin of safety while spending the year thinking what it would be like to NOT do this business. Many people with successful business do like the business or at least some significant part of it. Spending a year doing it, while at the same time contemplating not doing it, may clarify this for you, or it may give you a good idea if you have any employee or other person who might be interest in taking the business off your hands. Selling the business, or even working at it in some consultant role, might be a lot more lucrative than simply shutting it down.
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Old 03-04-2014, 08:31 AM   #4
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I've been involved with a lot of small and medium businesses including my own. A common recurring theme I see is that the founder/owner sees his/her hands-on participation as critical to the business's ability to function. Certainly it is something I've struggled with myself. I obviously don't know you or your business at all, but I think it may be worth a doing a few things:

1) Consulting with someone knowledgeable who you trust to get a relatively unbiased read on your participation. In my experience, in perhaps a third of cases the owner is pretty critical, another third they play an important but not unique role, and in the final third they are actually holding their business back.

2) Trying to think about a manager from a new perspective. I ended up discovering there is someone in my business who unexpectedly would be great as a manager. Admittedly, it's a step I'm still toying with and doing in baby steps -- I'm significantly younger than you and not as financially set in terms of assets accumulated. One way to look at it is helping to train/nurture a new generation of entrepreneur and passing the torch on.

3) If you can sell it, sell it. If not, consider hiring a manager even if you think you truly are critical to the business. There's a small chance you'll be pleasantly surprised and have a steady stream of passive income. And if not, you're financially set anyway. If you consider this versus a shutdown of the business, at least trying a manager gives the business chance--both for you in terms of cash flow and for your employees in terms of keeping their jobs.

I both envy you and sympathize with you. What it boils down to is valuing the guaranteed present versus the unknown future. The final thing I would add is that every (new) beginning seems to be preceded by the end of something else.
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Old 03-04-2014, 08:59 AM   #5
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Consider this: what if you got sick, had surgery, or broke something, so that you were not able to be involved in the business for 2 or 3 months. Would the business survive? Who would step in and do what you do? If you have ten employees, there is more to the business than only what you do.

I'd suggesst you hire a manager you can trust and then take a two month leave of absence (a sabbatical) and be totally detached from the business. Then you could see if you really could "not w**k", and keep yourself occupied.
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Old 03-04-2014, 09:02 AM   #6
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Thank you Braumeister and getting_older for the comments, much appreciated! Without boring you with the details of the business, it is a niche industry similar in a way to both oil wildcatting and film production. Unlike a widget making business that has recurring predictable cash flow, we work on long-lead projects that create financial assets. Sometimes they work out and sometimes they don't. If they work out, the created asset is sold at a premium. The projects take 3-10 years to complete. Opportunities for suitable projects are rare and require significant research and networking time on my part. Because of the odd nuances of the business, there is not a market to sell the business (competitors gladly buy proven projects, but other than a few desks and computers there is no real value to the operating business). I am at a point where I've identified 5 new potential projects. All or none may work out but it will take several years and a mountain of work to find out - "one more year" in this case is likely five more years. I like the idea of consulting and there is a market for that but I wonder about my ability to deal with the frustration of being a backseat driver. Maybe a better way to phrase my quandary is if, knowing the little I've shared about my personal situation, one could only decide to retire in 5-10 year intervals with each interval being (potentially but by no means guaranteed) significantly more lucrative, when do you push eject?
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Old 03-04-2014, 09:02 AM   #7
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Quote:
Originally Posted by edubya404 View Post
To be successful at my business requires my full attention - it's not something that can be turned over to a manager. To retire would mean closing the business and letting my team of 10 employees go. If I did so, it would be very difficult to re-start after more than a few months. Other than this business, I have no real skills and I would make a useless employee.
Your success to date proves that you're a successful entrepreneur, congrats (really).

But what are the chances you're really the only person in the world who can run said business? There's no one else as intelligent and hard working? Sorry, but it's highly unlikely to be true.

Most people overestimate how irreplaceable they are, I've replaced many who thought they were (and so did their co-workers in many cases), and we only went on to improve with new players every time. That's true up to an including Presidents, CEOs, business owners - they're replaced all the time, Welch, Gates, take your pick.

I had a friend who owned/ran a sizeable business all his life and did very well for himself. He retired late in life (almost 70), but he finally hired a professional manager (salary & perf bonus) to run the business for him. He confided in me about 7 years later that he was making twice as much $ now as he ever did when he was running the business himself, and he wished he'd retired and turned it over to someone else earlier.

Choosing a successor is not easy, and not a decision to made easily, but it can be done. It may take a while to find the right person, but capable people are out there, guaranteed...

Whether or not you want to retire now is another matter though.
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Old 03-04-2014, 09:08 AM   #8
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Your success to date proves that you're a successful entrepreneur, congrats (really).

But what are the chances you're really the only person in the world who can run said business? There's no one else as intelligent and hard working? Sorry, but it's highly unlikely to be true.

Most people overestimate how irreplaceable they are, I've replaced many who thought they were (and so did their co-workers in many cases), and we only went on to improve with new players every time. That's true up to an including Presidents, CEOs, business owners - they're replaced all the time, Welch, Gates, take your pick.

I had a friend who owned/ran a sizeable business all his life and did very well for himself. He retired late in life (almost 70), but he finally hired a professional manager (salary & perf bonus) to run the business for him. He confided in me about 7 years later that he was making twice as much $ now as he ever did when he was running the business himself, and he wished he'd retired and turned it over to someone else earlier.

Choosing a successor is not easy, and not a decision to made easily, but it can be done. It may take a while to find the right person, but capable people are out there, guaranteed...

Whether or not you want to retire now is another matter though.


+1 on this.... if you have 10 employees, I bet there is one that can step up and do what you do.... either 'good enough' or a possibility of being better...


If you cannot sell the business, then just give it to the 10 people and see if they can make a go of it... no reason to close it down if they can....
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Old 03-04-2014, 09:17 AM   #9
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Are there competitors in your business with younger and/or more motivated leadership that might consider a merger where after a period of time you could dial down to part-time and provide some value from you industry connections and the competitor would absorb your employees?
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Old 03-04-2014, 09:24 AM   #10
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Thanks for the comments! In this short format it is hard to include all the relevant details. Certainly I am not the only suitable manager and there are others that could do a better job without question. The issue for me is that when a new project is identified it takes capital to bring to fruition (and failure takes just as much capital). If the required capital were to continue to be mine, I would be unable to comfortably make the call on whether or not to invest were I, say, knee deep in a Montana trout stream - I'd need to know and understand lots of details which requires a ton of time and is not really "retirement". Otherwise I could burn through a lot of dough. An alternative would be to reform the company to use outside capital (not mine) from professional investors that have the time to delve into such things, but to position the company in that way seems like it would take several years.
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Old 03-04-2014, 09:32 AM   #11
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I completely understand your situation. Unfortunately, only you can decide whether you are ready to retire, do something else, or keep doing what you are doing. Based on what you have shared so far, I agree with your assessment that you will not like working for somebody else. So you either need to continue being an entrepreneur or retire.

Based on the many entrepreneurs I know, they have a hard time retiring. Their minds are always thinking about the next thing they want to work on, and when they try and have some down time, it's more frustrating to them than relaxing. You will need to give some thought as to whether you think you fit in this category. And give a lot of thought to how you would spend your time if you were not working.
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Old 03-04-2014, 09:53 AM   #12
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I can relate. My FIL was an entrepreneur. It's not that he couldn't have hired a manager, he couldn't trust them(slightly different). He retired at 42 after selling the business.

The business environment changed and the new owners went belly up in a couple of years. Probably would have happened to FIL.

FIL/MIL enjoyed 33 great years of retirement. They both passed early at 75. I'd take your money and run.
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Old 03-04-2014, 10:11 AM   #13
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Thanks for all the advice - this is a great forum to get help from smart people without any angle - so rare in real life!

I feel as if I'm at a crossroads and just don't want to screw it up. Accumulating is so time-consuming, and I don't want to have to do it again.
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Old 03-04-2014, 10:30 AM   #14
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I feel as if I'm at a crossroads and just don't want to screw it up. Accumulating is so time-consuming, and I don't want to have to do it again.
That's a really key point.

I once had a friend in a similar situation, except that he was able to sell his business at the age of 40 for more than enough to live very comfortably the rest of his life. What's more, that had always been his goal, so he accomplished his life's mission and was all set to enjoy himself in his many hobbies and outside interests.

As it turned out, he got so antsy that within two years he had started another business and is still running it happily today in his 70s. In other words, you never know, and you might actually be misleading yourself.

If that is the case (not saying it is), could you take sort of a sabbatical and try three to six months off to test the waters?
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Old 03-04-2014, 10:55 AM   #15
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To the OP: It seems like you are contradicting yourself. You said you "have plenty of dough to retire" but then later say you want to avoid having to make money again, suggesting you aren't sure. Perhaps you'd feel better if you posted the basics (expenses now, expenses projected in ER, and investments/nest egg)?
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Old 03-04-2014, 01:11 PM   #16
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One thing you can never get back is time. Time with the family, time doing what you like in free time, or other.

There is an old joke that I will repeat: You never hear anybody on their death bed say they wish they had spent more time at the office.
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Old 03-04-2014, 01:31 PM   #17
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...

Part of me wants to jump off the cliff and try a new lifestyle, but it's a one-way trip.
I've done this (jumping off cliffs/trying new lifestyles) at least 4 times in life. While indeed exhilarating, there was some cost associated with each change. I have been going through a similar change the past couple of years, but am approaching it in a much more methodical and intelligent manner this time (IMO).


Quote:
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...

I feel as if I'm at a crossroads and just don't want to screw it up. Accumulating is so time-consuming, and I don't want to have to do it again.
As we get older, there is more at stake, depending on your viewpoint (i.e., more to lose/less time to recover it). OTOH, I just spoke to a guy who at 50 is thrilled about his new adventure in moving from Los Angeles to Sweden with his Swedish wife. It's all a trade-off, and I imagine the greatest advantage comes from knowing what one's risk tolerance is. Also, having a plan B in advance in case it doesn't work out is always helpful in sleeping at night, no matter which course you take.
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Old 03-04-2014, 02:42 PM   #18
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Have you had any significant time off? Not sure how it'd work for your business, but if you could take a month or 3 off and practice retirement, it might help make up your mind.
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Old 03-04-2014, 05:07 PM   #19
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This is really appreciated - it's like having a personal advisory board - and the price is right! Going through this little exercise of posting forces me to corral all the hamsters that have been running around in my brain.

I have high expenses right now (kids school primarily) and that will continue until they get their sea legs - maybe another 15 years until the youngest is gone. Looking at an average of the last two years of expenses, we have 72x that in a diversified portfolio 50/30/20 stocks/bonds/cash, and no mortgage.

My business is highly capital intensive and concentrated, so were a future project(s) to go sideways it would put a meaningful dent in the savings. Conversely, if the project(s) were to go well, it could result in a 2-5x multiple of my investment. My employees are of course interested in continued growth and expanded opportunities. We are like a quirky little family and this business provides a great quality of life for them. Nonetheless, if the growth were to stop, these folks would soon look for greener pastures with more opportunities.

As I write this, it seems foolhardy to continue on the current path. I like the sabbatical idea (I've never taken off more than two weeks) and maybe with some distance an alternative path will emerge. One that entails far less risk and allows for more free time as an interim step.

Thank you for all the insight and any additional thoughts are greatly appreciated.
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Old 03-04-2014, 06:44 PM   #20
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I'll repeat the same thing the experienced members here told me before I retired in 2011 - don't retire with appreciable doubts, sounds like you're not sure. I didn't own the business I ran, so it may be different for you, but going back is difficult if not impossible for most retirees. Most retirees are 95% confident before pulling the trigger - IOW, you'll know if it's time. If you have doubts, it's probably not time yet.

I/we wish you the best, sounds like you need to let the hamsters settle...no rush.
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