I'm not sure what to do with my little low-income service business. I'm approaching FIRE and can't decide whether to sell it or keep it and be SWAMI. I thought if I wrote it all out I might get some clarity, and maybe some suggestions.
The backstory: I already downshifted - left corporate and did a career change, spotted a niche, set up this business. My aim was to just to work for myself, to do something fun to keep me busy and barely cover my expenses. (This is before I found MMM and realised it might be possible to not work at all.) It was never the goal to make lots of money.
Some days I love my work. I like my clients, they like me, so 99% of the relationships and interactions are really good for my mental health. Some of them, and one core referring business, really depend on me to fill a service gap (and this means that I must sell this business to someone and not just walk away one day.) On the other hand, I feel a bit trapped because the service is needed Monday to Friday, sometimes weekends. Some days are physically exhausting: hard on my body and/or working in yucky conditions. Thirdly, the paperwork is time consuming - things like bookkeeping and tax I'm finding to be taking longer than I'd like.
I started the business about 3 years ago, got busy within a year and ended up working more hours than in corporate and was never able to take a holiday, so I employed one person for a few hrs a week & holiday cover. Recently I changed from a sole-trader set up to a company set-up to protect my assets, employed more PT people, & reduced my hours in the core services even more. I earn about 20K now, don't do a lot of core service hours but I feel like I'm working a lot of hours still doing paperwork and BD.
It's still only a little business that isn't in very profitable area. It's a not a service that people will pay a lot of money for - think housecleaner or other personal service. PLUS a major factor in Australia is high minimum wages - if I employ someone full time in my industry, the minimum I can pay them is around 40K. That's for the basic core work. If I was to employ someone in Australia to do all the higher priced but day-to-day management and bookkeeping functions I'd lose money - I pay myself minimum wage but would have to pay them way more. I know a couple of similar-ish businesses in my industry that basically break the law and under-pay their employees but I'm not willing to do this. My fixed expenses (think business insurance and asset maintenance) are very high, that's just Australian prices again.
So why do it at all? Well as I said above, it is mostly fun, the clients are warm, my employees are good people and love their work. The business is still young and has growth potential and I kind of like playing around with that even though I hit some brick walls.
Here's the options I've thought through:
Option A: Try and sell the business/ assets as is and FIRE 'properly'. For tax reasons this would be after July 2018. I might miss my clients terribly and be miserable but I have plans for what to do with my time so maybe not. However, I'll miss out on the opportunity to market a new service business that I came up with that I was going to play around with in FIRE but ideally would sell to my existing client list to kick it off. It's a totally different offering/ industry but something they might well be interested in.
Option B: Sell the core part of the business which is M-F fixed hours and is a time suck but retain a couple of clients that take one of the more flexible services. I could work it so that I do those with low overheads (would not need the expensive assets & insurances) and I could take holidays and only work in good conditions. I would still get some fun times, earn maybe $5k pocket money but would feel less trapped. The business might not be attractive to a buyer however without those bits.
Option C: Try madly over the next 6 months to build the business so that it's profitable enough to pay a manager so that it can run itself and I can dip in and out as I want. One of my employees would be a good fit. I've been trying to get to this point over the last few months but I'm not successful just yet. I already raised prices 10-15% so now I need to think of value add-ons (struggling with this) or just do more hours and get that tiny hourly profit. I might be able to use an overseas virtual assistant for things like monthly accounts. Of course, I could do all these things anyway to make it a more viable and more attractive business to a buyer. It's hard when you are tired and you feel like you should be winding down to FIRE.
Has anyone any thoughts on what they'd do in my situation? I honestly change my mind every day!
Any thoughts on how to sell a business but still maintain relationships with 100+ clients when you aren't actually working for them day to day anymore?
