Empty Pockets
Recycles dryer sheets
- Joined
- Dec 29, 2006
- Messages
- 149
Hello all, I'm new here so if this topic has been discussed before I apologize. This is my first "real" post.
I'm guessing there are others on this forum that have owned their own small business and used it as a major source of retirement income. I have given my lifeblood to this business for the last 22 years. I started here when I was 19 years old and I made myself a promise that if I worked here 30 years I'd be able to retire. I'm still on track and have 8 years to go.
Here's my question. How have you structured the sale of your business when you retire ? Cash up front or a seller financed structured sale, contract for deed ? My business would be worth about $375,000, possibly more. I have a cost basis of $155,000, so there would be some capitol gains tax to deal with.
Ideally in a perfect world I would like to structure the sale of my business over a 10 year period at an interest rate of say, 7%. This would provide me with an annual income of around $53,000. I have no debt and I can live on that while my other investments grow for another 10 years. This is similar to how I purchased the business and it worked great for me and the previous owner.
The problem with this method is the business risk. I'd be betting on the success of the new owner. The price & terms are reasonable, and an ambituous new owner could easily handle it. The wrong owner could run it into the ground in a couple of years and leave me holding a note on a worthless business.
A cash sale would probably reduce the field of potential buyers, and it would mean facing the capitol gains tax upfront. But, it would add some peace of mind. One of the reasons I want to retire is so I don't have to worry about this business anymore. If I had the cash, I could quit worrying about it.
Does anyone have any experience, advice, suggestions, horror stories, success stories or any other words of wisdom ? Thanks for your help.
I'm guessing there are others on this forum that have owned their own small business and used it as a major source of retirement income. I have given my lifeblood to this business for the last 22 years. I started here when I was 19 years old and I made myself a promise that if I worked here 30 years I'd be able to retire. I'm still on track and have 8 years to go.
Here's my question. How have you structured the sale of your business when you retire ? Cash up front or a seller financed structured sale, contract for deed ? My business would be worth about $375,000, possibly more. I have a cost basis of $155,000, so there would be some capitol gains tax to deal with.
Ideally in a perfect world I would like to structure the sale of my business over a 10 year period at an interest rate of say, 7%. This would provide me with an annual income of around $53,000. I have no debt and I can live on that while my other investments grow for another 10 years. This is similar to how I purchased the business and it worked great for me and the previous owner.
The problem with this method is the business risk. I'd be betting on the success of the new owner. The price & terms are reasonable, and an ambituous new owner could easily handle it. The wrong owner could run it into the ground in a couple of years and leave me holding a note on a worthless business.
A cash sale would probably reduce the field of potential buyers, and it would mean facing the capitol gains tax upfront. But, it would add some peace of mind. One of the reasons I want to retire is so I don't have to worry about this business anymore. If I had the cash, I could quit worrying about it.
Does anyone have any experience, advice, suggestions, horror stories, success stories or any other words of wisdom ? Thanks for your help.