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Sell or stand. What would you do?

We own an internet based Ecommerce business with 14+ years longevity and limited yearly growth with no employees. We have the ability to manufacture 50 - 70% of what we sell but at the start of 2014 we found that it was actually more profitable to just outsource everything so we went that route and retired all the employees. Sales have not been effected, profits are up.

Currently we do about 900K/yr and we keep around 250K factoring in net profit + owners salaries and interest expenses. We work the business less than 40 hrs a week, processing orders, answering questions about product, emails, etc.

Ok so the problems are we are located rural. We own the land and property valued at 650K. Employees are hard to get, impossible to keep due to travel distance. We are approaching retirement, burnt out. If we sell, the money will be soon gone in living expenses and mortgage payments, not to mention Uncle Sam's handout. Moving is out for same reason. What if we get sick, injured ? T

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Answers (3)
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The BAF Group LLC
MD

That is funny! As I wrote my last comment, I thought this sounded very similar!

Perhaps the way to make your decision is to work backwards, starting with exactly what you need to Net from the sale. Then determine the impact of settling debts and paying taxes on the sale, which will eventually get you to the lowest price you can accept. Then determine what you will need in the way of annual Revenue and Net Income, in order to justify that kind of price. Then, you will need to formulate a strategic plan to bring the business to a Revenue/Profit level that meets that goal. Whether that is possible or not in a relatively short term is something you would need to judge, for yourself. But I still believe you need to look for a CPA that might be more appropriate for your need, as well as an Investment Broker/Financial Planner to determine what you can do to construct a more beneficial position for the terms of the sale and the use of the proceeds, after settlement.

Dec 8, 2014
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Dallas County, TX

Hi Don
Actually, you did appraise our business about 18 months ago at around 400K high end. Since then I have had an offer from a competitor at 500K which still stands. It's too little. By the time I pay off debt and Taxes I just as well give it away. Since we last spoke I have been able to reduce corporate debt by paying off it's SBA loan of 200K from personal funds. Of course, the company now owes that money to me. You are right about one thing though, it takes smart people to navigate a situation like this and all I have is a "by the book" CPA. I am sure that someone a lot smarter than me could figure this out to our advantage.

Dec 6, 2014
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The BAF Group LLC
MD

There are a lot of things to think about, without question. Although you seem to have a handle on the real estate and of it, it is uncertain that you know what the business itself could sell for. Without doing that, you are trying to make a decision without all of the facts behind you. As a Broker, I can tell you that you want to sell while the business is still growing. If you are burning out, you run the risk of allowing the business to erode, thus reducing the price you can command when you eventually go to sell. If I were in your position, the first thing I would do is get a value on the business, then get in touch with the very good accountant and financial planner, to see what kind of a plan you can put together for the future. We sold the business several years ago to a man in his 70s, who would wanted to sell for several years but was afraid to do so because he didn't want to live like a pauper, once his weekly paycheck from the business was gone. We introduced him to an excellent CPA and an investment broker. I saw that Seller several months ago and asked him how things were going. He said he had never had a better lifestyle. But again, you need to have all of the facts in hand, and the advice of top professionals in order to achieve that kind of success.

Dec 5, 2014

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