Hello all,
Long-time MMM reader and forum goer. In 2018 I started an e-commerce side hustle while working a corporate W2 job. In 2021 the business had grown to the point where I was making substantially more than my W2 job, so I cut loose and got out of the rat race. Fast forward 3 years, I'm now 30 years old, unfulfilled & unchallenged from the business, and looking to take another direction in life, primarily by starting a family.
Part of the reason I charted and stuck to this path was because my wife was a grad student for 7 years and had little to no income. She recently graduated and is heading into a significantly higher paying job with benefits, and also a highly personally rewarding career. This is not a source of animosity or tension in our relationship, if anything it's unearthed my desire to pursue a more meaningful and rewarding career. My wife is also 30. It's not too late to have kids, but we aren't in our 20s anymore and naturally, there's a biological clock. We've both always wanted to have kids.
The business itself is an Amazon FBA wholesale / resale business. I work 15-20 hours/week on the business and am the sole employee. The business is simple to operate and has plenty of room for growth. The business files taxes as an S-Corp which provides the owner with half of earnings in the form of W2 wages, and the other half as distributions. The numbers:
2022: $365k revenue, $103k earnings (SDE)
2023: $420k revenue, $102k earnings (SDE)
2024: $362k revenue, $70k earnings (projected)
The business has declined in profitability due to shifting main operational responsibilities to a warehouse (higher costs in exchange for my time & involvement), spending time strictly on operations while working on another real estate business, and very little (if any) time allocated to actually growing the business.
I'm considering selling the business to buy & work on a home, start a family, do something else entirely with my working hours i.e. go back to school, start or buy another business, become fully SAHD, homeschool, etc. I used to be energized by the business and take its challenges in stride. Now any challenges that come along are draining, stressful, and mounting headaches. I have no complaints...I understand that I'm in an extremely privileged and fortuitous position. But I'm only getting progressively more visceral desire to take a new direction in life. It's hard to explain.
I've spoken with a few business brokers who specialize in online business dealings. The brokers I've spoken with seem to think the business has value which could be purchased and grown by a buyer. I'm told similar businesses transact at a 2x multiple of earnings + the landed cost of inventory. This would put us at around $200k + inventory, totaling around $260k. Business brokers generally have a minimum 10% or $35k fee. Conservatively assuming we got $140k for the business + $60k in inventory, that would leave me with $105k after broker fees. Minus 30% in taxes, so figure $75k plus $60k in inventory.
We rent a 1-bedroom apartment. For us to have a newborn in our current place, we'd have to convert our living room to a pseudo nursery (adjoined with a home office). It could be done, but obviously isn't ideal. I would much prefer to buy a modest house that needs work, do the improvements ourselves and make it our own (including a nursery). Also important is that my wife has to wait 1 full year before getting paid maternity leave. What I'm envisioning is using proceeds from the sale of the business as a downpayment on a house. I could use proceeds to start a grad school program, start or buy another business.
Does this sound like a solid plan to move forward and get the ball rolling? When I write it out and read it, it seems like the right path.
I suppose this is more of a 'life advice' topic than a money one. Maybe others a bit older and experienced can chime in. Thank you for any advice or wisdom.