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

[TheMinimalist]

Man, you guys are awesome thanks so much for the thoughtful replies! So, it looks like I have a meeting with the potential buyer in a couple of weeks to discuss this face to face, so right now I'm gathering all of the financials, traffic data, etc., and I am also on the search for an attorney / CPA that can help me determine the best price point, come up with some negotiation points to squeeze a bit more out of the deal, strategize before the meeting, and of course to help make sure everything is legit before I sign the dotted line if it gets to that point. I'll also need some help handling and safely distributing the huge influx of cash that could be coming my way. Very exciting and scary times indeed!

I'd like to go over a few points you guys brought up...

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.

My thoughts exactly. Believe me, I am no Bill Gates haha! The main thought I have right now is making sure I sell at the price point that will set me up forever. I don't see a point in selling it for a few hundred grand less than that, so since I'm right there at the breaking point, I really want to make sure I will be set before I pull the trigger.

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 pretty much just summed up how I feel about all of this. I do indeed feel like I'm in the casino and if I walk now, I'll have them beat. If I wait, I could double, triple, or quadruple my money, but I could lose it, too. I really have no personal attachment to my business and I will sell the moment I can be set for life.

The 1 million offer represents just over 3 years of company earnings. Right off the bat it almost sounds cheap.

You know, this gets to a root issue with the "web property real estate market" right now. Nobody (both buyers and sellers) really knows how to value anything online as the industry is still so new and volatile. The general rule of thumb right now is that websites are worth 24 to 36 months of monthly net profit. You can see such sites being listed on places like EmpireFlippers.com. Of course, the real answer is a website is worth whatever someone is willing to pay for it. Heck, sometimes domain names without any website at all sell for millions!

Part of the reason nobody knows how to value web properties is because web properties are very untrustworthy. Anything can happen overnight. Case in point...

...snip... I have worked on probably thousands of websites by now as a developer, and it's amazing how quickly they can go bust if a competitor muscles their way in, google changes their algorithms, etc. ...snip...

BINGO!! This is why hardly anyone is willing to pay more than 3 years of profit for a website. I wouldn't quite say it is gambling, but it's close. You can do all the research in the world and purchase a super secure website, but due to issues completely out of your control, it could go bust literally overnight. This happened to thousands and thousands of businesses in 2011 when Google pushed through some major algorithm updates. Literally overnight, 6 figure businesses disappeared, simply due to an algorithm change.

I'll keep you guys posted on how things go. While I am leaning towards selling (should the offer actually become a legitimate one), it is just too early for me to make any definitive decisions at this point, especially before getting some real professional assistance with this. I just can't thank you guys enough for your perspectives though.

I will also start a thread tomorrow about growing online businesses and different ways to make money online for those of you who are interested. I'm not talking about the get-rich-quick or overhyped B.S. that most people talk about, either. While I can't promise everyone I can show how to build a $30k / mo business online, I do have a proven way to build websites into $1,000 / mo income streams and most of the work can be outsourced. I may have gotten lucky with my biggest income earner, but I've replicated $1,000 / mo websites several times now. I'll have some real actionable info for you guys to work with if this is truly the type of business you want to start.

Thanks again everyone!

[Kriegsspiel]

I'd do it if I were you. That much money should set you up for life.

[sky]

Cash is King

[Did]

@tm hugely kind of you looking forward to it

[Hankaroundtheworld]

My 2cents, if you like what you have built, and you have enough ideas to expand it, then I would not sell. You are young, and within 3 years of earning, you have that 1M USD anyway, especially if you keep on expanding (innovation). Of course, if your blog/web-idea has maxed out, and you do not see any expansion possible or you do not like it anymore, then sell out of course One way or the other, it is a nice situation to have.

[SimpleLife]

I would sell, making sure you're not selling to cheap. You can get a basic idea of valuation strategies without going to a CPA (they are not all created equal, I've had some inept ones, and the CPA tax advisor for my employer recently got smacked down by me when I proved them wrong).

The reason I would sell is because you can never be sure if the revenue will fade. Take the money and invest it in a portfolio of index funds, bond funds, REIT funds, physical real estate and leave some cash for investment opportunities that arise.

[cmonkey]

Adding my 2 cents as well, I agree with jennypenny...do both. That 1 million dollar offer has NO guarantee of sticking around. It is only here now!

Similar to this situation, I have only been to a casino one time, but that one time I came out with nearly double what I went in with. I had a whole bunch of tokens or something and each time I played, I cashed out the MOMENT I was up as that was the only guarantee I had of walking out positive. The lady that cashed me out looked at me funny and said something like 'You know you can keep putting these back in the machine right??!". Not if I wanna walk out positive.


One more note, it seems like you aren't too deep down the rabbit hole of learning to invest and so I would suggest you take your time with that. Having 1 million to invest and not knowing what to do with it can be a pretty risky place to be in. Be wise! As other's have said, that is quite enough to be set up for life, but you have to play your cards right.


Also remember you'll likely never stop earning money. You might also focus on trying to reduce your expenses from 25K. Consider it a challenge/game to see how low you can get without giving up standard of living.

[sharansingh]

Its too early to retire at 33 only.

[stayhigh]

Get the money and enjoy life

[bad_LNIP]

Take the money now and figure out what else you want to do later. Money talks, BS walks. I would take a solid 6 months to a year and just relax, focus on health and friends and family, explore new opportunities, travel, etc. Don't spend more than 20-25k which should be covered by investments. But definitely take the money.

[CactusSurfer]

Think of it this way--if you had a million dollars, would you go out and buy a website like what you have now, leaving you with however much money you have saved up at this point?

Retiring is a whole different story. You obviously have skills that can earn money after you sell the site, so there's no reason that you have to retire if you don't want to.

[FBeyer]

People take take the retirement part too seriously. You're not retired, you're free from obligations. Use that freedom however you want.

[BadHorse]

Think of it this way--if you had a million dollars, would you go out and buy a website like what you have now, leaving you with however much money you have saved up at this point?

That is a great (alternative) way to look at it.

@tm Congrats on building such an impressive business. I look forward to hearing what you end up deciding, and I'd also be very interested in hearing how you build sites!

[TheMinimalist]

Thanks so much again everyone. Things are sort of at a lull right now until our meeting, but I'll keep you all posted on what happens. I truly appreciate all the fantastic insight you collectively gave me. Lots of fantastic points and things to consider.

[banker22]

Congrats!

I think selling for $1m is way too low, however. Basically 3.3x EBITDA (earnings before interest, taxes, depreciation and amortisation). Most slow/no growth, mature, average margin businesses will trade from 7-10x. High growth, high margin, strong branded businesses will sell for 10-15x+.

Think about it this way. From the buyer's perspective, assuming 300k income, 70% tax rate and $1m purchase price...that's a 21% yield after taxes and expenses. Obviously there is risk, but isn't there also potential for further growth? What are the growth prospects? What is the probability it goes bust?

Without any more information, I'd be looking for c.$1.5m at least, which implies a c.14% yield after tax.