I've outright owned the business since 2019, just in time for the pandemic. I pay myself 60k year through payroll. 2019 business profits 130k, 2020 was 20k (but I also didn't pay myself that year), 2021 profits 230K (significant portion of that was getting rid of obsolete inventory that we had already written off, so it shows as 100% profit. only able to do that because no company had inventory last year and people were buying anything they could make work).
I've never taken any money out of the company profits, it has all gone back into the business.
I average 50% margin on the items. once I take out rent and other monthly operating costs I only make around 30% margin. (stock market made 24% last year... I know it won't do that forever).
Now I'm facing supply chain issues. In January my US manufacturer facility said they couldn't produce for us anymore which is going to affect 50% of our product line which accounts for roughly 15-20% of our sales. I can't find a US replacement at the cost I need as we are a wholesale only business and we don't have enough volume in those items to offshore. Previous to this I had already replaced 2 other manufacturers, 1 went out of business during the pandemic, and another offshore facility said they couldn't produce for us anymore because all of their capacity was bought up for the next 3 years. I've replaced 3 of 5 suppliers in the last 2 years.
Right now I'm looking at possibly getting product so late in the year that I might miss our busy season. Sales will certainly suffer but I doubt it would be enough to put me completely out of business but it will certainly affect yearly sales.
I had one suitor interested in buying the company but they backed out.
Right now the business checking account has 450k in it. I've talked to the CPA and I can show a loss on the remaining inventory and it would wipe out profits from 2021... so theoretically I could walk away with all 450k.
Am I crazy to close the business? I feel one of the major reasons for closing is that I could coast-fire and just be done with the stress. Mentally I'm done, the last 2 years were hard and this year is also going to be incredibly challenging. But should I keep it going and try to sell the business? I could likely get another 300-500K if I sell but I would also have to invest all of the 450K currently in the business to get more product and there is obviously no timeline on when or if someone would want to buy it.
here is how I see our family FIRE situation.
I'm 41 years old.
DW is 40, makes 95k year. she holds the healthcare for the family and loves her job. She would stay employed likely for 10 years until she is 50.
We have 3 kids ages 20, 16, and 14. The 20 year old is out of the house doing his own thing although we cover car insurance, cell phone, health insurance.
Can we live off DW income and not have to dip into savings?
current wife gross paycheck 3942.00 every 2 weeks (before taxes 603.11, insurance 261.23, retirement account 591.26 is taken out)
current wife take home = 2487.00 every 2 weeks.
we are putting 15% of her income into 401k. we could lower that to get the full employer match at 6% (they match 50% up to 6%). savings of 354.00 per pay
2487 + 354 = 2841.00 every 2 weeks. (I know some of that 354.00 will get siphoned by taxes)
or 5682.00 every 4 weeks.
currently we have 590k in various retirement accounts.
add the 450K from the business checking to it = 1,040,000 put into low cost vanguard index funds. I would not want to touch this until she retires in 10 years but would have it split roughly 50/50 between retirement accounts where we can't touch until 59.5 and brokerage accounts / roth IRA that we could take out if needed.
17k in personal checking account.
4 cars (1 for each person in the family that can drive) plus 1 motorcycle. all are paid off.
We live in LCOL area (midwest) and owe 71k on our house @ 3.48%. It's the only debt we have, will be paid off in 8 years. Zillow estimate at 330k. which is probably close in this housing market.
832 month mortgage
386 month prop. taxes
85 month prop. insurance
= 1303 monthly house cost
85 month water/sewer/trash
150 month average electric
57 month average natural gas bill
60 month internet
20 month Netflix
160 month auto insurance
80 month cell phone (currently business pays for cell phone but will probably go with mint mobile or similar low cost carrier for 5 lines, estimating 80.00 month)
=602 monthly bill cost
2021 credit card spending... 54k (using mint to track expenses)
8,000 yearly groceries
10,000 yearly restaurants, fast food, coffee (we need to cut significantly here)
12,500 yearly shopping (includes roughly 1k in purchases for side hustle business that pays for itself)
7,000 yearly health and fitness ( includes 2 surgeries at around 2k out of pocket plus 2700 in mouth surgery not covered by insurance)
5,000 yearly travel and entertainment (1800 of it is season ski passes and rentals for family)
4,000 yearly on auto maintenance and gas (I do 95% of all our repairs and maintenance so this includes replacement parts, tools, etc...)
2,500 yearly on "business expenses" (2,100 in professional licenses for wife and rest was internet hosting for a secondary business. all of this will disappear in 2022)
2,200 yearly on "misc items" (1,900 of it was taking down 3 trees on our property)
2,800 yearly on "other items" (including hair cuts, home improvement items, pet supplies, kids activities like paying to get into their sports, etc...)
=54,000 minus one time charges accrued last year like surgeries, tree service, professional licenses = 10k savings = 44,000 total (which matches closely to our 2020 credit card spend)
= 3666 monthly CC spending (44,000 / 12 = 3666)
all monthly costs total
1303 + 602 + 3666 = 5,571
5682 income minus 5571 expenses = 111.00 left over.
this is cutting it close but I feel like we can save in the fast food / restaurant and other areas of the budget if needed. I can also find some side hustles that make some money if needed.
what are your thoughts? what did I miss?
I'm good with computers, servers, SQL, networking and general IT stuff. I could likely find an IT job paying 50-60k in short time if I needed or just pick up part time work to help with bills. Nothing is beneath me and it also excites me to have the opportunity to learn something new. Just start a new daily grind that's different from the last 15 years.
