Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Sell the business or semi-RE?
Old 08-31-2004, 04:31 AM   #1
Confused about dryer sheets
 
Join Date: Aug 2004
Posts: 6
Sell the business or semi-RE?

I own a small business that has helped me save 3M by the age of 40. I am now burned out, however, and don't want to be at the office everyday and I would like to ER now. The business still requires my attendance full time due to a lack of employees with the skills to run the business as well as I can.

I have tried to find someone to run it for me but have had no success yet finding the right person. I have attempted to sell the business covertly, but that has not worked out so far either as no buyers have materialized with the ability to pay or run the business.

If I am able to find a buyer I will probably net, after taxes and fees 750K. The minimum I think the business would bring in a "fire sale" situation would be around 400K.

I am now considering bolstering the employee count to cover some of the things I do and then let my existing employees run the business with my oversight, and then I would semi-ER. My thinking here is even if they don't run it as well as I could, they may be able to run it at a profitable enough level given the right incentives. If that doesn't work out I still think I could get the "fire sale" price in 5 years or so.

Has anyone else had a similar situation where they were able to semi-ER from a small busienss with success?
__________________

__________________
bijoux is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Re: Sell the business or semi-RE?
Old 08-31-2004, 05:51 AM   #2
 
Posts: n/a
Re: Sell the business or semi-RE?

Quote:
The business still requires my attendance full time due to a lack of employees with the skills to run the business as well as I can.
The way you've described it, well, it just doesn't sound like this could run without you. I'd be careful leaving this business now, it could set up a chain of financial events that could ripple through the entire U.S. economy.
__________________
  Reply With Quote
Re: Sell the business or semi-RE?
Old 08-31-2004, 06:46 AM   #3
Thinks s/he gets paid by the post
BigMoneyJim's Avatar
 
Join Date: Feb 2003
Location: DFW
Posts: 2,627
Re: Sell the business or semi-RE?

If you are burned out, I can't imagine that hiring more employees will make things easier on you. If you can't find a buyer who will run your business right you definitely won't find an employee--or group of employees--who can, and micromanaging employees in my opinion is way more stressful than doing anything yourself.

I don't know what your lifestyle is like, but if I had $3m I'm confident I could retire today at 34 withdrawing $100k per year and never worry about running out of money.

The ex-workaholics around here can probably offer more appropriate advice than I can, but I'm doubting that you'll be able to retire or semi-retire as long as you own that business, or any business for that matter.
__________________
BigMoneyJim is offline   Reply With Quote
Re: Sell the business or semi-RE?
Old 08-31-2004, 06:47 AM   #4
Full time employment: Posting here.
 
Join Date: Apr 2004
Posts: 802
Re: Sell the business or semi-RE?

LOL
__________________
Zipper is offline   Reply With Quote
Re: Sell the business or semi-RE?
Old 08-31-2004, 08:10 AM   #5
 
Posts: n/a
Re: Sell the business or semi-RE?

Quote:
I own a small business that has helped me save 3M by the age of 40. ... The business still requires my attendance full time due to a lack of employees with the skills to run the business as well as I can.
i.e. You don't own the business. The business owns you.

Quote:
If I am able to find a buyer I will probably net, after taxes and fees 750K. The minimum I think the business would bring in a "fire sale" situation would be around 400K.
3 mil in the bank plus another 400k minimum. Take the money and run.

Quote:
I am now considering bolstering the employee count to cover some of the things I do and then let my existing employees run the business with my oversight, and then I would semi-ER.
If this business could be sold for $400k, then it probably throws off about $100k a year. If you're burned out from running it all the time, that $100k is compensation to you. If you have to pay more employees to keep the thing running in your absence, then maybe there are no economic profits to this at all.

i.e. You don't even own a business. You own a (well paying) job.

Last I looked, people don't pay dime one to have jobs, even $100k a year jobs.

You are not the only person in this situation. A number of friends own small "businesses" which keep them nicely. They could not find jobs which paid as well and gave them the freedom not to report to bosses. They are, however, involved full time. Their spouses are involved full-time. Their lives are consumed by undelegatable tasks, not the least of which is finding and keeping competent help.

In these situations, you've got two owner-managers working 60+ hours a week and pulling $150-200k out of a "business". They think they can sell the business to someone else for a million bucks because it throws off $150k a year minimum. They have forgotten that their own time is worth money. They have been surprised to find that no one will pay a million bucks to buy their "businesses", which are in fact just two jobs that require managerial skills.

Take the money and run. Really.

__________________
  Reply With Quote
Re: Sell the business or semi-RE?
Old 08-31-2004, 09:40 AM   #6
Thinks s/he gets paid by the post
 
Join Date: Feb 2003
Location: Mesa
Posts: 3,588
Re: Sell the business or semi-RE?

Quote:

The way you've described it, well, it just doesn't sound like this could run without you. I'd be careful leaving this business now, it could set up a chain of financial events that could ripple through the entire U.S. economy.
At first I thought this was a bit extreme, but as I thought about it, I became really worried. A shut-down of this business would clearly lead to the early colapse of social security and medicare (fewer folks paying in after all). With the loss of solvency there, the US will have to adapt a wealth tax that will put all retirees at risk. Next will come a federal sales tax and confiscation of our homes. This will cause all early retirees to have to go back to work -- if they can find it. In the end, can we expect anything other than the complete colapse of the US economy. Of course, the colapse of the World economy will follow. For the sake of all early retirees -- indeed for the sake of the whole world -- don't stop running this business no matter how much you want to retire yourself. We need you to keep up the effort for our sake.
__________________
sgeeeee is offline   Reply With Quote
Too much emotion, not enough logic.
Old 08-31-2004, 09:49 AM   #7
Moderator Emeritus
Nords's Avatar
 
Join Date: Dec 2002
Location: Oahu
Posts: 26,619
Too much emotion, not enough logic.

Quote:
The business still requires my attendance full time due to a lack of employees with the skills to run the business as well as I can.

My thinking here is even if they don't run it as well as I could, they may be able to run it at a profitable enough level given the right incentives.
There's nothing wrong with loving what you do and doing it as long as you love it. Those emotions are great. The problem with emotions is when you hate what you're doing and emotions get in the way of doing what needs to be done to extract yourself from an unhappy situation.

Sounds like you have a definite training problem here, and maybe a little control problem as well. Is there really no other human being on earth who's capable of learning to run the business as well as you? Or maybe none other WILLING to work with you? GE has been able to survive without Jack Welch and I suspect your business could survive without you. Succession isn't hard-- does anyone remember who ran GE before Welch?

If you're truly concerned about establishing a business legacy then it's necessary to devote your time to figuring out what training your successor needs and then acquiring it. Anything less is prolonging your agony, or perhaps it's an indication that you're not ready to let go yet. There's nothing wrong with not being ready to let go, but it's hypocritical to claim that you're ready to let go and then not doing what needs to be done to actually accomplish the letting go. The only person being hurt by that sort of hypocrisy is you.

Here's another thought. You already have $3M. With that asset base, the absence of $400K is unlikely to affect your lifestyle. Why prolong the agony again with the expectation of being given another $400K-$750K? The business is worth what someone's willing to pay for it (which currently seems to be about zero) and not what you think you should be given for it. "I can't retire because I can't sell out" is not a valid excuse, unless it's being used to rationalize a decision you don't want to face.

If you're serious about ERing NOW then you need to walk away from this situation. Wrap up the business obligations, pay off or lay off your employees, terminate the leases, lock the door, and drop the key in the landlord's mailbox. Next morning find something else to do that doesn't make you feel burned out. Don't go back to the job.

If you're contemplating part-time ER then you need to locate & train your relief without sifting through the earth's six billion inhabitants for the ideal candidate. Lay out a skills list, work with a business broker and a headhunter, and get on with it. They'll find someone if you don't.

Quote:
... even if they don't run it as well as I could, they may be able to run it at a profitable enough level given the right incentives.
Are you saying that your business isn't profitable enough yet, even with you in charge, or are you saying that you're not giving your employees the right incentives to run the business properly? If you're not doing those things, should you be running the business in the first place?

I've survived an entire military career without having to worry about making a profit, but I can recognize the benefits of training and the hazards of control. I was good at what I did, and part of that is ensuring that my presence was not required for my old units' success after my departure. I prided myself on training my people so that when I wasn't around, no one noticed. They even learned how to make their OWN decisions!

Enough angst. If the business can't survive without you then you're not ready to ER. If it can't run adequately without your full-time support then you're not ready to semi-ER. If full-time support is burning you out and you're the critical employee, then the business is going to fail. You need to pull out of this Vulcan death spiral with (1) a successor search and a training plan or (2) a shutdown plan.
__________________
*
*

The book written on E-R.org, "The Military Guide to Financial Independence and Retirement", on sale now! For more info see "About Me" in my profile.
I don't spend much time here anymore, so please send me a PM. Thanks.
Nords is offline   Reply With Quote
Re: Sell the business or semi-RE?
Old 08-31-2004, 10:04 AM   #8
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
dex's Avatar
 
Join Date: Oct 2003
Posts: 5,105
Re: Sell the business or semi-RE?

What about selling the company to the employees?
Get as much as you can up front and secure the rest with the phyical assets.
__________________
Sometimes death is not as tragic as not knowing how to live. This man knew how to live--and how to make others glad they were living. - Jack Benny at Nat King Cole's funeral
dex is offline   Reply With Quote
Re: Sell the business or semi-RE?
Old 08-31-2004, 10:38 AM   #9
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
cute fuzzy bunny's Avatar
 
Join Date: Dec 2003
Location: Losing my whump
Posts: 22,697
Re: Sell the business or semi-RE?

Its a CRISIS I tell ya!
__________________
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
cute fuzzy bunny is offline   Reply With Quote
Re: Sell the business or semi-RE?
Old 08-31-2004, 10:46 AM   #10
Thinks s/he gets paid by the post
 
Join Date: Feb 2003
Location: Mesa
Posts: 3,588
Re: Sell the business or semi-RE?

Quote:
Its a CRISIS I tell ya!
This may be more than just a CRISIS. It may actually rank as a SERIOUS CRISIS!!!
__________________
sgeeeee is offline   Reply With Quote
Re: Sell the business or semi-RE?
Old 08-31-2004, 10:50 AM   #11
Thinks s/he gets paid by the post
BigMoneyJim's Avatar
 
Join Date: Feb 2003
Location: DFW
Posts: 2,627
Re: Sell the business or semi-RE?

It's worse than you think. He's in the dryer sheet industry.
__________________
BigMoneyJim is offline   Reply With Quote
Re: Sell the business or semi-RE?
Old 08-31-2004, 10:51 AM   #12
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
cute fuzzy bunny's Avatar
 
Join Date: Dec 2003
Location: Losing my whump
Posts: 22,697
Re: Sell the business or semi-RE?

As long as it doesnt escalate into a very, very serious crisis.

My god, I'm in a tizzy now. I need to go lie down until this passes.
__________________
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
cute fuzzy bunny is offline   Reply With Quote
Re: Sell the business or semi-RE?
Old 08-31-2004, 11:01 AM   #13
Thinks s/he gets paid by the post
wabmester's Avatar
 
Join Date: Dec 2003
Posts: 4,459
Re: Sell the business or semi-RE?

Quote:
I own a small business that has helped me save 3M by the age of 40.
You may have already tried this, but try listing your business here:

http://www.bizbuysell.com/

And be sure to include your quote above in the listing. People buy dreams (but good cash flow helps).
__________________
wabmester is offline   Reply With Quote
Re: Sell the business or semi-RE?
Old 08-31-2004, 12:56 PM   #14
 
Posts: n/a
Re: Sell the business or semi-RE?

Hello bijoux! I agree with "Take the money and run!"
I was in a similar situation before I ERed, except
without your money . Anyway, the business'
balance sheet did not look that good and the company
had not been consistently profitable for me. I briefly
took a run at selling as a going concern, but then I just
dismantled it and took about 3 years selling off the pieces, so not exactly a "fire sale". Anyway, this was
a good decision and worked out well for me (still
paying dividends today in fact). I'd be gone in a New
York minute, but that's just me.

John Galt
__________________
  Reply With Quote
Re: Sell the business or semi-RE?
Old 08-31-2004, 06:31 PM   #15
Confused about dryer sheets
 
Join Date: Aug 2004
Posts: 6
Re: Sell the business or semi-RE?

Dang! Thanks for all the replies.

Quote:
The way you've described it, well, it just doesn't sound like this could run without you.
No, that's not the case. I'm sure it would run just as good or probably better with someone else in control. The reason I "can't" find someone to run it is probably a control issue and a management issue-- I'm scared of giving up control, and I'm really a terrible manager so I try to do everything myself.

Quote:
You don't own the business. The business owns you.
That's exactly what I'm begining to realize. And as someone else noted, I really have more of a high paying job rather than a true business that can last, evidenced by the lack of buyer interest.

Thanks again for the advice..............



__________________
bijoux is offline   Reply With Quote
Re: Sell the business or semi-RE?
Old 08-31-2004, 09:57 PM   #16
Thinks s/he gets paid by the post
 
Join Date: Jun 2004
Location: No. California
Posts: 1,601
Re: Sell the business or semi-RE?

bijoux

Please post back and let us know if you decide to make a change. You do have many more choices than some of us.....good luck
__________________
KB is offline   Reply With Quote
Re: Sell the business or semi-RE?
Old 09-03-2004, 05:36 AM   #17
Thinks s/he gets paid by the post
 
Join Date: Mar 2004
Posts: 1,318
Re: Sell the business or semi-RE?

B ijoux,
I also owned a few small businesses, both of which I sold or extricated myself from, (first one profitably, the second one in order to ER once I realized I could).

I totally agree with the posts telling you to take the $ and run, PROVIDED THAT

a) you've been mentally preparing for awhile to ER and that it is part of your plan or dream and something you've wanted to do for awhile.

b) you do your own math on your own lifestyle expenses, run the Firecalc or other calculators and have, at least in rough terms, expenses that can be covered by 4% of your financial assets (120k a year?)

I would advise against semi-retirement in your own company like that, except insofar as you make it a transition year (2 max) to hand the company over to new owners, but given the control-nature you describe, it sounds like it would end in tears anyway.

Firesale sounds like a great option, gives you an extra few hundred k. the marginal value of that extra 350 you might get from really finessing the perfect sale sounds like not much premium. Think of it this way: an extra 350k, (which itself is not 100% guaranteed) would give you 350k x 4% = 14k per year in perpetuity of additional income. Will the difference between 140k a year (3.4 mil @ 4%) and 154k a year (with the extra icing from a perfect sale) be worth it? I seriously doubt it, but only you can decide.

If you aren't ready to ER yet, then all this is moot. Stay in there and try to get out on your own timetable.

If you are ready to ER, but think you might still like to do a bit of work or somesuch, then I'd say get out now. Take a year sabbatical with zero commitments to anybody except yourself and your family and chosen friends. Reclaim your life. Get your health in shape, get your house fixed up or whatever. Ride a bike, take a long trip someplace.

After a year, if you still want to be semi-retired as opposed to fully ER, you can think about doing something part time -- consulting, doing something in your old industry, helping out other entrepreneurs, or buying and rehabbing real estate or maybe putting your talents to work in a non-profit.

Bottom line, if you are ready to ER, then do it asap, clean and crisp, take a year off without commitments, and then re-assess from there going forward.

(been there, done that, got a T-shirt with holes in it to prove it).

Good luck!

ESRBob

__________________

__________________
ER for 10 years; living off 4.3% of savings (and a few book royalties ;-)
ESRBob is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Tax Re: Sell of a business flpanhandle FIRE and Money 10 05-11-2007 06:58 PM
prediction of 2/27/07 newyorklady FIRE and Money 21 03-04-2007 01:45 PM
Selling a business at retirement Empty Pockets FIRE and Money 5 01-07-2007 11:57 AM
Buying a business Cool Dood FIRE and Money 5 09-29-2006 07:50 AM
Ten stupidest mistakes made by the newly self employed cute fuzzy bunny FIRE and Money 6 04-14-2006 10:06 PM

 

 
All times are GMT -6. The time now is 08:58 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.