427Vette
Recycles dryer sheets
$750,000. I would sell it for a fraction of that.
Opinions on where I stand
- Thread starter 427Vette
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$750,000. I would sell it for a fraction of that.
COcheesehead
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Careful, that could be broker bait for just getting a listing.
Many sole proprietorships are worth a fraction of one year’s sales. I know people who sold for 25% of sales up to 1x sales.
I think you're pretty solid on the FIRE concept. Regarding the business, though, I wouldn't take the concept of selling it lightly. I sell businesses as my day-j*b, and the market is hotter now than I've seen it in ten years. It's worth taking the time to get the financials in order and finding a qualified broker. If you really do have the AR that you mentioned, then $750k could be quite realistic. You may be surprised what you net out of it. Depending on its size, there are currently slews of buyers ranging from corporate drop outs getting an SBA loan to PE Firms and Family Offices who are seeking yield via purchase of a business. When I see owners try to sell to the employees, it usually yields less than doing a proper arm's length sale, which could be a win-win. (If you sell for more, you can bonus the employees more at the end.) The process of selling can take a few months and be pretty stressful, so here's my suggestion if you just want the easy path: Talk to 3 or so qualified brokers and figure out the realistic pricing. Then choose your favorite broker and ask if he'll cut his fee if you purposely "price it to sell." Deals that are priced below market can sometimes move very quickly. Good luck! (And no, I'm not trying to solicit any business....just offering some suggestions.)
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427Vette
Recycles dryer sheets
That is a fraction of one years sales. I appreciate the warning. I did my homework on the broker. I talked to lots of people and he was recommended by our accountant and our insurance guy. I would be happy getting one years profits as a selling price.
427Vette
Recycles dryer sheets
Great advice. Thanks for the help! I was recommended to the broker that I spoke with by people I already do business with. Short of googling how do you recommend I find more qualified brokers to speak with?
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COcheesehead
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Good, you’re doing your due diligence.
One way would be to look at the website bizbuysell.com. Look for businesses in your area and see who the selling broker is. When I did my post, I kind of skipped reading many of the others, but just caught a glimpse of one. It sounds like you're running a "mom & pop" electrical business where you and your wife are the primary workers. Indeed this kind of biz may be a little more challenging to sell (since essentially the new owner is buying a job) but I still think it's worth exploring seriously. In this environment, it seems like almost any business is selling. And tell all the brokers you speak with something like, "Don't tell me the number you think I want to hear....tell me the number and terms (cash at close vs. future payments, earns outs, etc.) that you think you can get me quickly." Be careful not to sign a long term exclusive agreement with a broker. The good ones should be able to produce a buyer within a couple months. I think a six month exclusive is about the longest that should be considered, but it's not unreasonable to ask for 3 months. And ask about their buyer list....do they have one or are they dialing for dollars? Will they approach competitors and if so, how do they distinguish between the ones who just want to see info vs. the serious buyers? Regardless, this is definitely the strongest small biz sales market I've seen, so now is a great time to get moving on a biz sale. Best of luck!!
How many of your age compatriots are also retired or living a life of leisure and no longer working?
What are your plans for occupying your time after you stop working?
I have read a few articles regarding early and very early retirees who find themselves bored and lonely after retiring because all their friends are still tied to jobs and can't join them in activities.
It reads as if the financial piece of the retirement puzzle has been solved. Now for the more difficult part of the puzzle.
Develop a plan to fill your time after stopping work.
What are your plans for occupying your time after you stop working?
I have read a few articles regarding early and very early retirees who find themselves bored and lonely after retiring because all their friends are still tied to jobs and can't join them in activities.
It reads as if the financial piece of the retirement puzzle has been solved. Now for the more difficult part of the puzzle.
Develop a plan to fill your time after stopping work.
427Vette
Recycles dryer sheets
Its not hard to believe but none of my friends are retired. I am not one that seeks out friends to occupy myself anyway. friends all seem to be needy and require scheduling to make something work. Sadly to me it ruins the experience sometimes.
Regarding my plans; I have been working since I was 10 and self employed since I was 24 years old. That forced me to be tied down pretty much all of the time. If I were to get away for a few days work stuff was always the first thing on my mind. I want to go do what I want to do without worry of things falling apart at home. We have a motor home and plan to run around the country pulling our enclosed trailer with some of our ATV's, kayaks etc and see what goes on down the all of the back roads/back waters I can find. I also own 13 vehicles, various motorcycles, a few atv's, boats and a some side by side atv's that I enjoy using and doing the maintenance and repairs on. There is always something that needs a little tweaking here or there or at the very least a wash and wax job. I have two homes and several buildings, again there is always something to do. At my cabin I have a mile long driveway, it requires constant tree trimming, grading etc. I wan to hunt, fish and trap without the pressures of having to answer the phone while in the deer stand. If and when I run out of things to do I will certainly find something else. I think if people are bored in retirement it shows an incredible lack of ambition and imagination. I also need to take better care of myself. I plan to work out on a more consistent basis and maybe play a little old timers league hockey. With all of that being said I plan to retire not die. I will work a little if I WANT to. I know that there will be a need and I think I would be able to do some of the things that enjoy yet about my job.
Are you saying that figuring out how to spend my time in retirement is more difficult then figuring out how to make and save millions of dollars in your forties is? If that is the case I may not be ready to retire at all. I don't think that I am up for the challenge.
Regarding my plans; I have been working since I was 10 and self employed since I was 24 years old. That forced me to be tied down pretty much all of the time. If I were to get away for a few days work stuff was always the first thing on my mind. I want to go do what I want to do without worry of things falling apart at home. We have a motor home and plan to run around the country pulling our enclosed trailer with some of our ATV's, kayaks etc and see what goes on down the all of the back roads/back waters I can find. I also own 13 vehicles, various motorcycles, a few atv's, boats and a some side by side atv's that I enjoy using and doing the maintenance and repairs on. There is always something that needs a little tweaking here or there or at the very least a wash and wax job. I have two homes and several buildings, again there is always something to do. At my cabin I have a mile long driveway, it requires constant tree trimming, grading etc. I wan to hunt, fish and trap without the pressures of having to answer the phone while in the deer stand. If and when I run out of things to do I will certainly find something else. I think if people are bored in retirement it shows an incredible lack of ambition and imagination. I also need to take better care of myself. I plan to work out on a more consistent basis and maybe play a little old timers league hockey. With all of that being said I plan to retire not die. I will work a little if I WANT to. I know that there will be a need and I think I would be able to do some of the things that enjoy yet about my job.
Are you saying that figuring out how to spend my time in retirement is more difficult then figuring out how to make and save millions of dollars in your forties is? If that is the case I may not be ready to retire at all. I don't think that I am up for the challenge.
Bamaman
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
I too come from a long line of IBEW electricians, and am familiar with the business. You've done quite well for yourself and your present financial situation has already been addressed. I honestly don't know how you've done so well without having a bunch of employees bringing in much more revenue than you were paying them.
But if I was buying a business today, the purchase price would not be based on sales--unless you have some kind of niche in the industry. I'd be evaluating your hard assets--trucks, equipment, Accounts Receivables, etc. That's what I would be basing the purchase price upon.
Our friend's son in a large city is an electrical engineer, and he's a contractor specializing in high rise electrics. He's got 85 trucks running and over 150 employees. Now he has some intangibles and a customer base that's worth something.
Good luck to you in the future. It's really nice to know that you're financial stable, and can go in any direction you wish.
But if I was buying a business today, the purchase price would not be based on sales--unless you have some kind of niche in the industry. I'd be evaluating your hard assets--trucks, equipment, Accounts Receivables, etc. That's what I would be basing the purchase price upon.
Our friend's son in a large city is an electrical engineer, and he's a contractor specializing in high rise electrics. He's got 85 trucks running and over 150 employees. Now he has some intangibles and a customer base that's worth something.
Good luck to you in the future. It's really nice to know that you're financial stable, and can go in any direction you wish.
427Vette
Recycles dryer sheets
I know that it sometimes can result in a fist fight with the wrong person but I am not a supporter of the IBEW. It would be a story for another day but I was a member and it fell apart when I wanted to go on my own. In our business much like many others the rates you can charge are basically set by your competitors. The only way to be successful is to find a way to be more efficient then your competitors, hire great quality help and pay them very well so they are conscious about what they are doing. It helps them better themselves and the company. The other way to succeed is to learn to like doing the work that no one else likes to do. It allows you to charge a bit more and possibly get in front of some of your competitors clientele because they couldn't get anyone else to do the work.
I started a thread a few months back with the heading being "Is My Business Worth Anything?" I tend to agree with you in saying that if I were buying a business, I would only look at hard assets as well. But apparently there are people out there that don't think like you and I do. I partially think that our business isn't worth anything because I started it and if I can do it anybody can. The other side of that is, is that we have over 4,000 customers in our customer base. Some of them have been with us for over 20 years. Our annual sales are around $1.2mm. So I am starting to think there may be some value there. If I could sell it for one years profits only, the new owner could get a 1 year ROI. When I look at it that way, it seems like a no brainer to me.
Thanks for the well wishes!
I started a thread a few months back with the heading being "Is My Business Worth Anything?" I tend to agree with you in saying that if I were buying a business, I would only look at hard assets as well. But apparently there are people out there that don't think like you and I do. I partially think that our business isn't worth anything because I started it and if I can do it anybody can. The other side of that is, is that we have over 4,000 customers in our customer base. Some of them have been with us for over 20 years. Our annual sales are around $1.2mm. So I am starting to think there may be some value there. If I could sell it for one years profits only, the new owner could get a 1 year ROI. When I look at it that way, it seems like a no brainer to me.
Thanks for the well wishes!
dirtbiker
Full time employment: Posting here.
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Any reason why you're not currently trying to sell the business? I'm no expert in buying small businesses, but you've had a business broker give you an estimate you're more than happy with. You have solid sales data. Why not try to get it sold and retire? You already have more than what you need, given your retirement spending plan. Add more on top, and it seems like a no-brainer to me.
Like you, I also started working at age 10. First a paper-route until High School, the I worked in two different retail stores, then entered a Co-Op Engineering School shortly after graduating HS, and still working at age 63.
Yes, for those like us finding things to do that scratch one of our itches in retirement can be a challenge. Start thinking about what you like best and find a leisurely way to enjoy it.
Success is not a stranger to you. With a little thought you will find activities that yield a pleasurable retirement.
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427Vette
Recycles dryer sheets
This isn't like selling a recliner on craigslist that you decided one morning that you are all of the sudden done with. There are many things that come into play. The first thing is that I wanted to know for sure I was safe to consider selling it. A lot of the information that I have received is only days old, I just met with our fidelity rep last week. I wanted to to get the members opinion on this board, again this thread is only a couple days old now. Another aspect is that I have employees and their families to think about, whatever I decide to do will no doubt make sure that they are 110% taken care of. Along with that I have a huge list of customers that 100% rely on us to run their operations. They need to be taken care of as well. There are a lot of I's to dot and T's to cross to just kick up your heals, yell woohoo and hang out a for sale sign.
I wish that I shared your same confidence that it is a "no brainer". From the opinions that I got here it sounds favorable but it doesn't sound like a slam dunk either. One poster mentioned that it could possibly be tight later in life when health insurance costs ramp up. I am actively pursuing options daily now. Hopefully something transpires soon.
CardsFan
Thinks s/he gets paid by the post
I think some need to review your previous thread: http://www.early-retirement.org/forums/f27/is-my-business-worth-anything-96881.html . You have put a lot of thought into how to "extract".
OP,
It seems to me you are FI, but torn about how to exit. And you clearly care about your employees and your clients. So, I think the comments about how to pass the torch to the employees is where you might want to start. You are not looking for a big payday, they (I presume) would like to keep working in this business. There should be a place where you both can "win".
JMHO
OP,
It seems to me you are FI, but torn about how to exit. And you clearly care about your employees and your clients. So, I think the comments about how to pass the torch to the employees is where you might want to start. You are not looking for a big payday, they (I presume) would like to keep working in this business. There should be a place where you both can "win".
JMHO
dirtbiker
Full time employment: Posting here.
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Well, it's a no-brainer to me because it's not my business and I have no skin the game.
That's admirable that you're looking to take care of your employees and their families and your clients. A lot of people wouldn't have that as even an afterthought. This being said, make sure that you don't screw yourself trying to bend over backwards to take care of others. Often times, you find out they wouldn't do the same for you. Try to find a way to take care of everyone and still get a fair price out of your business you've put so much work into. It sounds like your business has afforded you a good lifestyle and the ability to plan for retirement. Whoever buys your business should reasonably expect the same for them, assuming the business is still operating as it has. That should cost them some money to buy a business that is already up and running with a full client list, as opposed to starting from scratch and living meagerly while building a client list (I'm assuming).
watchman3135
Recycles dryer sheets
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With $4 million, I guess I don't understand why you'd be questioning it in the first place especially if you've ran all the calculations. I just retired on at 53 with $1.25m a month ago which I could pull $50k per year but have chosen to go with 3% rather than 4% as a SWR since at 53, I just don't really need anything else. I've got all the toys I could ever need. My wife, who is 48 decided to continue to work another 4-5 years. Your 2.8 mm alone would produce $112,000.00 per year pre tax of course. If still in any doubt, and I get the nervousness by the way because I was there in the past 6 months, you can always cut cost. Remember, cutting cost is still way more powerful.
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427Vette
Recycles dryer sheets
Update
I wanted to post an update on my current situation. I learned a lot about selling a business in the last year and a half. I ended up listing our business for sale with a very qualified broker. Surprisingly we had a tremendous amount of response and several buyers were very interested. To make a very long story short I ended up backing out of the sale with a buyer and made a deal to sell it to our two employees. I of course didn't get the money that I would have by selling outside the company but it was the right fit for our employees and our clients. It is a HUGE relief to have that done and behind me.
We signed the paperwork and transferred ownership last Friday. All of the sudden I found myself retired! It is in the contract that I have to be around for 14 days for training. These guys have been "trained" for almost 10 years. They won't need me at all so I am done!
Unfortunately there won't be much rest right away. We decided to build a new house and shop on some land that we own by our cabin so we are jumping right into that project. I am looking forward to working on that project without having the whole work thing to do as well.
I really appreciate some of the advice that I received from this thread. It helped me make decisions on the biggest deal I have ever made in my life...
I wanted to post an update on my current situation. I learned a lot about selling a business in the last year and a half. I ended up listing our business for sale with a very qualified broker. Surprisingly we had a tremendous amount of response and several buyers were very interested. To make a very long story short I ended up backing out of the sale with a buyer and made a deal to sell it to our two employees. I of course didn't get the money that I would have by selling outside the company but it was the right fit for our employees and our clients. It is a HUGE relief to have that done and behind me.
We signed the paperwork and transferred ownership last Friday. All of the sudden I found myself retired! It is in the contract that I have to be around for 14 days for training. These guys have been "trained" for almost 10 years. They won't need me at all so I am done!
Unfortunately there won't be much rest right away. We decided to build a new house and shop on some land that we own by our cabin so we are jumping right into that project. I am looking forward to working on that project without having the whole work thing to do as well.
I really appreciate some of the advice that I received from this thread. It helped me make decisions on the biggest deal I have ever made in my life...
Winemaker
Thinks s/he gets paid by the post
Good luck in your retirement and congratulations on a job well done!
watchman3135
Recycles dryer sheets
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Exactly. I admire many here such as yourself were able to do it in their 40's but I figure if I get out at 53, I still would hopefully have 10-15 years before I start to slow down. You know the rationale, work another year or two to put a bit more away. I was on the fence because I made $85k in my comfy IT job and even with ER planning in mind I used to think how could I ever walk away from a easy job and the security of a regular pay check and literally live on half but after 28 years, I was getting burnt out and the thought of working until I drop at my desk sounded depressing. So I am now 2 years into ER and with this crazy market our net worth has grown to $2 million but do I feel any more secure than 2 years ago? No and I'm only pulling 2.5 %.
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Koolau
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Heh, heh, one thing you may have even noticed already: Those last few "one-more-year-at-w*rk" went a lot slower than all the following ER years! So, word to the wise, think long and hard about OMY vs FIRE. You "seem" to get fewer years of retirement for every OMY though YMMV.
