Should I Sell My Business And Retire At 33 Years Old?

[TheMinimalist]

Hey everyone - first of all, I'd like to say hello and I hope it isn't rude to ask a question right off the bat. I've read a lot on this site and in the forums as well as purchasing the book, so THANK YOU for already being helpful!

The real reason I wanted to create a forum membership though is to ask a BIG question to like-minded people. So, here it goes...

About 5 years ago I was a truck driver with more than $50k in debt (student loans, credit cards, and a ridiculous car payment on a ridiculous sports car I had no business owning). Now, to turn a very long story into a short one, while I was a truck driver, I began creating some blogs and websites which ended up earning me some pretty good money. Enough were I was able to quit my trucking job in 2011 and focus on my online business full time.

Since then, my business has grown to levels I never dreamed possible. I have outsourced a HUGE chunk of the business so I only really need to work about 10hrs per week on it and I can literally take weeks off at a time if I want to (and I DO). Currently, I am having the best year yet with my net income after expenses being about 25k per month before taxes. Crazy. Crazy. Crazy. I still can't believe it myself and I never take a single dollar for granted. For one reason or another, I found myself in the right place at the right time in the right industry and was blessed with this gift. In a sense, it feels as if I won the lottery. Sure, I put in a TON of hard work and I enjoy the job I do, but I also admit that I got a bit lucky as well.

So, since 2011 I have been able to pay off all of my debts and I have about $200,000 saved (in the bank right now which obviously needs to be moved somewhere else). I have a reliable used vehicle that is paid off and I live for about $550 / mo in a campground in a 3 year old travel trailer (paid for). Other than that, my expenses are very minimal. It's just me and my dog (no family to support) and most of my leisure activities are cheap or free (hiking, going to the beach, walking around the city, playing video games, surfing the web, writing articles for my websites, etc.). In other words, I have no desire for a big house, fast car, expensive travel, eating out everyday, etc. I feel I could easily live on 25k per year long-term as that is what I already do, and have been doing for the past 7ish years, in spite of being debt free and now earning an income that is near the top 1%. I simply prefer living a simple and minimalistic life.

Now to my main question... I have a soft offer from a company to purchase my business for $1,000,000. This isn't anything official yet, but it is something I need to seriously consider. I figure after taxes I'll get something like $750,000. So, $750,000 added to the $200,000 I already have saved is $950,000. To make the math easy, let's say I have $1,000,000 even after all is said and done.

Is this enough to retire on at 33 years old? I want to ensure that I never have to work again, but being at such a relatively young age, I worry that $1,000,000 won't get me far especially depending on what inflation does to it. Sure, I can use the 4% rule, but what if I live to be 100 years old? I could be in a whole heap of trouble.

I also need to consider whether taking a $1,000,000 one-time payout is worth giving up the roughly 25k per month net income (before taxes) I am receiving from the business. After all, this business could last me a decade or longer and may even get more profitable as time goes on (as is the trend). On the other hand, no business is entirely secure, so I'm taking a risk by not accepting the 1 Million up front.

So, what do you guys think? I apologize as this sort of turned into a book, but I'm just having a heck of a time deciding what to do here. Fortunately I have some time to decide, but do I take a guaranteed 1 million hoping it will be enough to retire on? Or should I wait it out, collect my monthly earnings, continue saving, and risk having the business decline at some point, making it far less valuable (or even not valuable at all)?

My main concern is just getting to the point where I never have to work again. So at what point should I sell?

Thanks for the input and sorry again for such a long post!!

[Gilberto de Piento]

Are your sites relatively resilient or are they based on anything unreliable, like link building tactics Google doesn't like?

[TheMinimalist]

Thanks for the quick response and follow-up question (and it's a GREAT question). The sites are indeed resilient. They are built through content marketing using high quality (1,000 word minimum) articles and videos which then attract organic traffic from Google. Even the images I use are purchased legally. I have used ZERO back linking strategies for any of my sites. My oldest and most profitable site has thrived during Google algorithm changes including Panda and Penguin (anxiously awaiting the new Penguin release) while my other sites sort of entered the realm after the biggest updates, but they all grow year over year at a predictable and steady pace. So, to directly answer your question, I'm about as white hat as it gets (no PBN's, link building tactics, guest blogging for links, etc.). My income is also diversified through several different affiliate partnerships, Google Adsense, and Media.net.

The main downside is that I am VERY reliant on Google for my traffic on all my sites and when I start a brand new site, it takes 1 to 2 years before it starts turning a profit. Even though I try to do all the right things, if for whatever reason Google wanted to stop sending traffic to my most profitable site, there goes the majority of my income overnight.

[daylen]

That is easily enough to retire with, even at a conservative 3% it will cover your living expences. Plus, it is unlikely that you will never make any money again (you already started one business). Over time you will also (hopefully) reduce expenses by insourcing.

Ultimately is depends on you personally, but the smartest financial move is most likely to sell in order to reduce risk (though this depends on the financial cost of failure). It is never good to be too invested into one company (especially your own). Though life is short, and you will probably not have another chance to run a successful business. Selling out might cause you to regret not taking it further (if only for the thrills) once you are wiser, realizing money is cheap and experiences are all that matter.

[JamesR]

The classical Safe Withdrawal Rate that lasts for 100+ years is closer to 3%.

So 1 million * 3% / 12 = $2,500/mo. That's assuming that you invested it 75% index funds & 25% bonds according to the trinity study.

Click on the link to the Trinity study Update in this article: http://jlcollinsnh.com/2012/12/07/stock ... nd-anyway/

But guess what, you can do a significantly better portfolio allocation that is much less volatile, safer, and better returns / CAGR. Check out portfoliocharts.com for ideas.

[JamesR]

I would recommend selling your sites, assuming that the offer is a fair multiple of the current revenue - such as better than 15 * monthly revenue perhaps.

You can always build another site after, while sitting pretty on the $1.2 mil you'd have afterwards.

[Gilberto de Piento]

It definitely sounds like the sites are solid then.

I should add, congratulations on building such an impressive business! As someone who has also built sites, I know it is hard work.

If you have any advice (maybe in a new thread) it would be welcomed.

[TheMinimalist]

Wow, you guys are amazing I never expected such quick and direct replies. Thanks so much! Daylen you also mentioned something that I keep thinking about too...

"Plus, it is unlikely that you will never make any money again (you already started one business)."

Absolutely! Even if I don't have to work, I probably would still want at least a part-time job or I would drive myself crazy. With that said, it would be nice to be able to work anywhere I want. I could go get my $8/hr job back as a Six Flags security guard which I loved. Or I could go work at an animal shelter or do something truly meaningful to me but something that doesn't pay well.

Thanks a lot guys, your added perspectives on this really is helpful.

[TheMinimalist]

It definitely sounds like the sites are solid then.

I should add, congratulations on building such an impressive business! As someone who has also built sites, I know it is hard work.

If you have any advice (maybe in a new thread) it would be welcomed.

Thanks so much! I always love connecting with other online business owners so please feel free to reach out anytime. If there is enough interest, I would LOVE to start a type of "ask me anything" thread on growing profitable websites for passive income.

[jennypenny]

Since Dragline is out of town, I'll speak for him and say "Do both!"

Sell your current business, but keep doing what you're doing building new sites. If your track record is any indication, in 5 years you'll have a million dollars in the bank and be back to earning $25K/month.

[TheMinimalist]

Hey thanks for chiming in! I have definitely considered this and in all likelihood, I probably wouldn't stop creating websites entirely as I truly do enjoy it. The main question is, do I sell out now or later?

Part of the dilemma I'm facing is the conditioning I've had throughout my life just like everyone else. I had myself convinced that in order to retire early I would need $5,000,000 at my current age and at least $2,000,000 even if I were in my 50's. I'm very quickly starting to realize the possibility of retiring, right now, on 1,000,000 or less and it's messing with my mind!

[Sclass]

Since Dragline is out of town, I'll speak for him and say "Do both!"

Sell your current business, but keep doing what you're doing building new sites. If your track record is any indication, in 5 years you'll have a million dollars in the bank and be back to earning $25K/month.

Well said. Great advice.

You obviously know how to dig a goldmine. Why not do another. You obviously have valuable skills that can be scaled.

Great success. I'd love to know how to do something like this for income and something to do in retirement. Please consider starting a read sharing some of your techniques.

[The Old Man]

Conservative investments will generate 2% dividends ($1 million = $20 K/year), which since you are not selling principal would be immortal. You can retire. You would have to make up $4 K somewhere, but you can do it.

I would suggest with a $25K monthly business income (~$300 K/year) with a relatively resilient foundation that you should be able to negotiate a better selling price. Perhaps also a consulting arrangement to help with the transition. Best of luck.

[TheMinimalist]

Thanks again everyone, especially for boosting my ego, haha! When I go to bed tonight I'll be staring at the ceiling for a while thinking about this. As I said earlier it's only a "soft" offer right now, but at any time this could turn into a real offer, so a life changing decision could be fast approaching.

Since it seems like there is some interest and as a way of saying thanks to you guys for providing some additional insight, I'll create a thread in the next few days here about my business, how I grew it to the point it's at now, how others can do the same with little or no knowledge of building websites, and I can field questions about it as well. In spite of my desire to sell my business and retire, creating income online is a bit of a passion of mine and I love talking about it.

I appreciate the well wishes everyone!

[Did]

First, a huge congratulations for building a business like that. There is no guarantee of success doing such a thing and you have obviously nailed it. Well done.

Second, double well done for not suffering from lifestyle inflation in that circumstance. Doubly impressive.

As for whether or not you should sell, it is of course your own decision. You might be Bill Gates or Mark Z. we're talking to here. What would we know? But, in my experience, if you run a business and ever have an offer that sets you up for life then take money. Always take the money. Set yourself up for life. You cannot predict the future. Your websites could decline in popularity or profitability. To be honest they probably will.

You are in effect at the Casino and are 1.25 million dollars up. Should you keep betting to try to turn it in 2 million, 4? Or should you walk, and do what you want with your time after this safe in the knowledge that you never have to work for cash again if you don't want to?

You have great skills. Can you replicate your success if you want more cash? Do you need to?

I have known many who are all excited by their success who go on to lose everything. I'm still helping one out now. He had an IT business and had delusions of passing it on to his son. He had to sell his house in the end. He's around 60 and is completely broke. Sad.

Anyway, good luck and well done again.

[Did]

EDIT: I will also say of course that the 1 million is an offer. It's a negotiation. Perhaps speak to your accountant about realistic valuations given your cash flow. Maybe you can sell for more. Get advice from professionals.

[Quadalupe]

Congratulations, you are in a good (but I imagine exciting and maybe even a bit scary) position!

I don't have much too add beside what others have said, other than that it might be useful to read the experiences Patrick McKenzie had selling his small business, Bingo Card Creator. He used a broker to help him sell his site, but YMMV.

Good luck!

[wood]

Wow, congrats on successfully doing something many dream of: creating passive online income at that level!

I'd like to add that although $1,000,000 is a lot of money, is there a way you could squeeze out more from a sales deal? Because the way I see it, it could be worth more than a million. If you get 25k/month thats 300k/year. The 1 million offer represents just over 3 years of company earnings. Right off the bat it almost sounds cheap. If the business has solid prospects, I'd pay more than 1 million for it. I'm personally not into stocks, but most people here on the forum are. And if I'm not mistaken, stocks (businesses) are oftentimes bought at 10 x yearly earnings or more. Who knows, maybe you could get 1.5 or even 2 million?

Any way, good luck and I'd be very interested in reading about how you did it from scratch

[FBeyer]

Was thinking about discounted returns as well... It seems that business is worth more, depending on the stability of cash flow and potential further growth. Congratulations on the business. Anything you want to share, I'll be all ears

Have fun, I don't know what else one would do In your position. Well besides finding out how to create stable investments.

[RealPerson]

I would recommend selling your sites, assuming that the offer is a fair multiple of the current revenue - such as better than 15 * monthly revenue perhaps.

You can always build another site after, while sitting pretty on the $1.2 mil you'd have afterwards.

I am not an accountant but I believe that the 1 million would be taxed at regular income tax rates. Depending on the state where the minimalist lives, the 1 million is probably closer to $600,0000 after taxes. Making $25 K a year is much more tax efficient, so that may play into the decision. Given your track record, I would still sell the site and build new sites afterwards.

Congratulations!