427Vette
Recycles dryer sheets
What valuation did the business broker give your business?
$750,000. I would sell it for a fraction of that.
What valuation did the business broker give your business?
$750,000. I would sell it for a fraction of that.
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.)
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.
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?
It reads as if the financial piece of the retirement puzzle has been solved. Now for the more difficult part of the puzzle.
$750,000. I would sell it for a fraction of that.
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!
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.
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.
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.
Congrats on your success!
I'm single and retired three years ago at 47 with a 1.6 mil net worth. You can certainly retire today, it just a question of whether you feel ready.
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 %.