During my exploration process of selling Financial Samurai, I consulted with a friend who sold his website for $2.8 million some years ago. He offered to share what transpired, what he would have done differently, and why he wished he would have held on. He regrets selling his online business. The numbers and timing have been slightly modified to protect his privacy as well as adhere to his non-disclosure clause.
Not only do I think it's wise to hold onto your online business, you should also consider investing in online businesses. After all, the richest people in the world own businesses.
Take a look at the open-ended venture capital fund, the Fundrise Innovation Fund. The fund invests in artificial intelligence, fintech, proptech, and more. Unlike traditional venture funds that are invite only with $200,000+ minimums, you can invest in the Innovation Fund with as little as $10.
The Start And Finish Of My Online Business
In 2003 I started a website for $1,000 and in 2010 I sold it for $2.8 million. A 2,800X return is better than practically every single angel investment ever, but I still regret my decision.
At the time, I thought it was the best move I could have ever made. I was 30 years old and like Sam, had just started a family of my own.
By selling the site, I thought I would free up some valuable time to take care of my young boy and it did. But after six months, I wasn't satisfied with only being a stay at home dad after working so hard on my business for so many years.
When our boy turned one, we decided to send him to daycare so I could go back to my old routine of building a business. At 2.5 years old, we decided to send him to preschool. My wife worked a full-time job.
I also thought that by selling the site, I would feel much happier cashing out. In 2010, there was still a tremendous amount of uncertainty in the economy. I thought I was smart for selling because my site survived the downturn while so many other businesses went to zero.
Despite having a nice payout, I wish I never would have sold. Here are the reasons why.
Selling An Online Business For Millions And Regretting It
Here are all the reasons why I regretted selling my online business for millions and regretting it.
1) Felt like I had lost a child.
Years before the birth of my son, I birthed my website. Selling the site made me depressed that I no longer had my baby to nurture. For almost seven years, I looked forward to working on my website before work and after work. When I got laid off in 2009, I spent 60 hours a week on the website.
Sometimes I spent way more time on my business than I did on my biological child. But that's not a surprise because many working parents spend more time at work than raising their children too. I loved my business as much as I could love any child. When I sold the website, I felt like the worst father ever.
Selling something you love for money is a horrible feeling. I felt a tremendous trough of sorrow. You will only realize how much you love that something until it’s gone. If you feel nothing after you sell, then that is how you know you made the right decision. My online business was like my baby that I got rid of for money.
2) Lost my sense of purpose.
I underestimated how important it was to look forward to having something to do every day. My business allowed me to reach the top of Maslow's Hierarchy Of Need's Pyramid. Once I sold, I could not recreate a similar site because I had a non-compete for one year. I could have created a new site in a different genre, but I was only passionate about the genre I was in.
Having no purpose led me to drink heavily and use recreational drugs much more often. I gained about 30 lbs over the next couple of years and constantly felt depressed. My relationship with my wife suffered and I began to resent my son for taking up so much of my time. It was bad for a couple years until I went to get some counseling.
My online business was more important for my health and relationships than I had realized. Before you make any decision, go through a regret minimization exercise to help you make better choices.
3) Lost a creative outlet.
When we were kids, we'd always create something new in school – whether it was paper machete, clay figurines, or drawings, we were always using our minds to create. Once I sold my site, I tried to pick up guitar, but that didn't last. I should have known because I've had my guitar gathering dust next to my bed for the past eight years.
Then I tried painting, but that was too messy. After a couple “works of art,” I gave up. All I wanted to do was write what I had been writing for the past seven years, but couldn't for the first year.
During the pandemic, having an online business would have given me a wonderful creative outlet to write, tinker, and explore. Instead, quitting my business gave me too much time to be alone with my thoughts.
4) I left so much money on the table.
After I sold my site, I looked longingly at other sites in my space that kept on growing. I was envious for other people's passion. I was also in awe that they were not so easily tempted by money to sell. Make no mistake, selling out is predominantly about the money.
It turns out, selling in 2010 was close to the bottom of the stock market, real estate market, and the economy. What a mistake!
The site had an operating profit of about $600,000 a year. At the time, I thought $2.5 million plus a $300,000 earnout was a good price. But some of the sites that were smaller than mine kept on going to the point where they started making $1 million a year by 2019 and some as early as 2017. Not only that, valuations for websites went up too, along with the valuations of the S&P 500.
Even if my operating profits had been flat at $600,000 a year, if I had just held on for five more years I would have not only made $3,000,000 more in operating profits, I also could have sold my site for closer to $4,200,000 + a $600,000 earn out due to higher valuations.
If I was able to grow my operating profits to $1,000,000 a year like many of my peers, then I would have been able to sell my site for closer to $7,000,000 today versus $2,500,000. I would have also collected all those years of profits as well.
In essence, I left at least $5,000,000, and closer to $11,000,000 on the table if I could have just hung on until now!
Sam has told people in his post on doing retirement all over again, that life is long and to not be overly in a rush to retire early. He is right. Over a decade later, I remember the day I signed the sale document like it was yesterday.
5) I wasted my time trying to recreate a successful business.
During my year-long non-compete, I started three new businesses in different fields that failed. After my non-compete was over, I tried starting a couple other websites similar to the one I had. They also didn't gain any traction.
All told, I wasted three years of my life trying to get back what I lost. It infuriates me to know that I could have spent those three years working on the site I sold and made even more money. I never should have sold my online business cash cow.
6) My baby was finally killed.
Four years after my site was purchased, the acquirer redirected my site to land on some other business they owned. Essentially, they killed my site and all the time I had put into it. I was foolish to think my site would live on forever once it was out of my control. Now, all that shows up are crappy articles that haven't been updated in years.
As you get older, you start thinking about leaving a legacy for your children. Unfortunately, I cannot proudly tell my children this is what dad built because what dad built is gone. Creating a family business would have been a wonderful.
7) I started taking shortcuts that made me feel ashamed.
After about six years, I finally started gaining traction with a new site. But I have to admit, I'm not proud of the way I got here.
First of all, I did a lot of scammy link-building to try and game the search engines. Second, I started taking the ideas of many established sites and just copying their articles with my own spin. I even copied the way other established sites wrote their author bios with the same affiliate copy.
No longer was I trying to create something original. I hired a bunch of writers to pump out as much search-engine-friendly content as possible to make as much money as possible.
I also put a lot of advertising dollars behind my content even though I knew they were boring as sh*t because I had figured out a way to make more than my advertising costs. My modus operandi was to copy what was already successful. It felt icky.
Related: Things To Think About Before Selling Your Business
8) I became irrelevant in my community.
When I had my site, everybody gave me the time of day. Journalists would ask me for a quote. I would be asked to come on podcasts or TV. Other bloggers would say nice things about me or my site. My offline friends would refer to me as a successful entrepreneur to friends.
Once I sold my site, I lost contact with many of my peers who I had thought were my friends. They were outwardly congratulatory about my sale, but behind my back, they stopped caring. I could no longer help promote their work so they stopped giving me any love. The podcast and interview requests stopped as well.
Once you lose what makes you valuable, you can recognize who your true friends are. I'm not one to need constant accolades, but it felt depressing to go from lots of respect and attention to nothing.
I decided to buy myself back into the conversation by sponsoring various activities in the community. I feel better now about getting recognized, but deep down I'm sad to not have more organic friendships in the community.
9) I didn't fully reinvest my proceeds.
I sold my business in 2010 because I was glad my business still had value after the devastating crash. In my mind, there was a good chance the market would crash again. Sam said he felt the same way in 2012, which is why he put his house on the market.
Given my fears of a double dip recession, after selling, I just held onto my proceeds in cash. It was not until 2016 did I invest about 50% of the proceeds.
By then, I had missed out on a very healthy rally that probably cost me more than $500,000 in lost gains. Talk about adding salt in the wound after already missing out on $5,000,000 – $11,000,000 if I had just held onto my site until now.
When you are presented with a windfall, it is much harder to reinvest these proceeds than you think. You are more afraid losing this money versus the money you invest every month from your paycheck.
Related: Reinvestment Ideas After Selling Your House For Big Bucks
10) Taxes took so much away.
Although I sold my business for $2.5 million (excluding the $300,000 earnout a year later), I only ended up with about $1.75 million after paying federal and state taxes. $1.75 million is still a nice chunk of change, but by selling your business, you are essentially surrendering yourself to the government.
When you are operating a business, you have a lot more flexibility to spend money to reduce your taxable income. You expense your flights and lodging to a conference in Paris. You can even buy an SUV or truck for your business and deduct the cost.
I calculate my average effective tax rate when running my business was closer to 20% versus the 30% I paid when I sold. Over the long term, this 10% effective tax rate difference really adds up.
Related: How To Pay Little Or No Taxes For The Rest Of Your Life
Don't Ever Sell Your Profitable Online Business
Maybe I'm being too hard on myself. Sure, the online business could have imploded if I didn't sell. But if you're doing things the right way and can clearly see a path to continued growth, there is no way you should ever sell a profitable online business.
As Sam says, cash flow positive businesses greatly increase in value during a declining interest rate environment because it takes more capital to generate the same amount of risk-free return. Here are some other things to consider before selling your business.
It's definitely tempting to sell a online business for a lot of money, especially in a really strong economy. But if you think about the biggest businesses in the world, they've been around for decades.
For example, Coca Cola was founded in 1892. Mars Inc, a $60 billion company that makes M&Ms and pet food, was founded in 1911. The list goes on.
Many of the world's largest companies have been through multiple down-cycles. But they kept on going and kept on reinventing themselves to make greater fortunes. Downturns are what made these companies stronger with new inventions, new strategies, and new ways of doing things.
When running an online business, start thinking about creating a multi-generational online business for your children to run. The longer-term you think, the better your online business should turn out.
When interest rates declined to rock-bottom levels, the value of online businesses went way up. Why? Because online businesses generate strong cash flow and have big operating profit margins. It takes a lot more capital to generate the same amount of risk-adjusted income.
Further, online businesses are defensive because they are always open. Online businesses are truly some of the best businesses in the world. The pandemic made it clear that having an online business is more valuable than having a brick and mortar business.
Suggestions For Starting An Online Business
Every business needs their own website. Here's a step-by-step tutorial showing you how. Not a day goes by where I'm not thankful for starting Financial Samurai in 2009.
I ever would have imagined being able to engineer my layoff from a well-paying job in 2012 to just write and be absolutely free. You just never know what might happen if you try. Back when I started, I had to hire someone for $1,500 to launch FS. Now you can launch in under 30 minutes for less than $50.
Invest In Private Online Businesses As Well
Invest in private online businesses through an open-ended venture capital fund. This way, you have brilliant entrepreneurs work for you. Or you can do both! I am because I have enough passive income to be considered financially independent.
Companies are staying private for longer, as a result, more gains are accruing to private company investors. Finding the next Google or Apple before going public can be a life-changing investment.
Check out the Innovation Fund, which invests in the following five sectors:
- Artificial Intelligence & Machine Learning
- Modern Data Infrastructure
- Development Operations (DevOps)
- Financial Technology (FinTech)
- Real Estate & Property Technology (PropTech)
Roughly 35% of the Innovation Fund is invested in artificial intelligence, which I'm extremely bullish about. In 20 years, I don't want my kids wondering why I didn't invest in AI or work in AI!
The investment minimum is also only $10 while most venture capital funds have a $250,000+ minimum. You can see what the Innovation Fund is holding before deciding to invest and how much.
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I am so happy I didn’t sell my online business back in 2018. The money would’ve been nice, but I would’ve had to pay a lot of taxes. Further, writing on Financial Samurai has given me so much purpose during the pandemic.
Since getting an initial offer in 2018, I have already made the offer amount in profits. Now, everything is gravy. Here are some of my reflections on making money online since 2009. I plan to hold onto my business for the next 20 years.
This post spoke to me.
Sold our biz a few years ago for a chunk big enough that we don’t have to work for some time, maybe ever (if markets cooperate lol).
Selling your child. Yes, this is exactly what it feels like. Like a child, your business is part of you, an extension of you. Your soul, sweat, blood and tears have poured into it for years. Selling it feels just like selling your child for money. I balled like a baby at the farewell party when I publicly thanked 2 colleagues with whom I had been through battles, good times and tough times. It was embarrassing to cry on stage in front of 50 people but I was powerless to stop it. The depth of feeling was so great.
Going from a somebody to a nobody. When I ran my business I made decisions, set plans, hired people, had some standing in the community as a successful entrepreneur. I was king of my own little world. After sale my wife and I were a lot richer but lost being somebody. That was tough. Fortunately for us we had 4 small children to attend to, which gave some sense of purpose. But yeah I miss being someone, miss mattering. We also lost our friends who were our colleagues in the company. When you leave you have less in common and the relationship weakens over time. We realized that our business had been most of our life. Selling it left a gap.
I get the OP’s feelings about what could have been. But he is being too rough on himself. He made the best decision he could at the time, knowing what he knew and world circumstances then. In hindsight everything is clear. But competition can erode margins, things can happen, sale window can close. You never know. Taking the money off the table is not a wrong choice.
In our case yes, we both miss having a successful business to run. We working with great people toward a common goal, and contributing value to society. We miss the creative outlet. We miss mattering.
On the other hand, selling for us was the right thing. If we hadn’t sold at that time I don’t think we ever could have sold given the stage our biz was in and market evolution. Selling gave our family options we didn’t have before. We locked in a big chunk of money. We got off the grind (yes, it was becoming a grind trying to grow the biz and keep everyone happy). Our space was hugely competitive. From what I can tell the new owner is struggling 3 years on. I think we would have done better than he’s doing, but who knows?
It’s funny – as a seller you want your former biz to be successful, but not *too* successful lol.
Selling or not selling are super personal decisions. Everyone is different. Everyone’s circumstances are different. We all just make the best decisions we can.
“ as a seller you want your former biz to be successful, but not *too* successful lol.”
Agree! Thanks for sharing. I hope to keep my business for another 20 years. Let’s see what happens!
I once got some outstanding life advice that always stuck in my mind and proved helpful — always make decisions to move toward something. Never make decisions solely to avoid something, or out of fear.
Definitely applies to decision to sell a biz or not.
Keeping FS seems the right call in your case. You enjoy it, you’re good at it, it makes money. What positive direction would selling it enable? If nothing, keeping a great option.
Excellent advice! Thank you.
Hi there, I was hoping I could speak with you as I am considering selling my business but have a much different situation than yourself. Thank you
The older I get the more I’ve realized that the people who have really achieved great wealth in life are all entrepreneurs or key equity holders. I can see the temptations to sell of course, but there’s a lot to be said about keeping your own business in the family.
I’m self employed and don’t regret leaving my old corporate day job ever. Yes entrepreneurship is hard and there’s always a million things to do, and fomo from competitors, but I hope to hold on to my family business indefinitely and pass it down to my children.
Great insights in this post, thanks!
Few business owners actually ever reach the point of selling. With a plan in place, selling a business can be a great thing.
As the author noted, the selling owner needs to understand what their net will be after taxes. They also need to understand if that amount is an appropriate amount to help them achieve their goals (whether early retirement, transition into something new, or whatever).
Great points about the post-sale impact. When I sold my company in my early 40s I went from 20 years of high-performance, high-stress, go-getter days to super-chill with tons of free time.
Sounds great, right? Well, when your body is used to balancing constant stresses but then you no longer have those stresses – the body gets seriously out of whack. I had physical stress symptoms even though I had no more stress in my life. Crazy!
It took well over a year before my body found full balance and “stabilized”.
Years later, and after speaking with dozens of other owners, I realized these “withdraw” symptoms are fairly common for owners who sell their businesses.
Just being aware can help owners deal with the situation better.
Thank you so much for the insight, Brad! I am going through this right now after selling the business in September.
Can you share any insights about your tax rate after selling?
I sold my bussines for less than I was making per year when the profit started going through the roof, meaning if I worked at least 1 more year I would already have more money. If I worked few more years I would have probably doubled my net asset value (the bussines was a guaranteed profit for at least few more years)
But I didn’t. Why? I reached my FIRE amount (at 29 years old). I was burnt out (12 years) and wanted to just stop working and enjoy family and life, even if that meant passing on to shitloads of money. No regrets. I am finally stress free and the feeling is amazing
Oh man, congrats! But also, bummer. It’s one of those things you may regret a year from now once you’ve recuperated. Was there simply no way to just take a month off and relax while owning the business? What type of business was it?
It was IT related, software development. I had vacations with few weeks off but it never helped.
To be honest I really think I won’t regret it. The stress was just too much, I wasn’t enjoying anything in my life because of it (family, vacations, etc). I’m not saying everyone’s bussines is so stressful but for me it was. Maybe I was doing it wrong, I’m a perfectionist and was putting far too much work and caring into it.
The feeling I have every morning waking up knowing I dont have to do that anymore is wonderful. Even if it doesn’t last, it was worth selling it to enjoy this.
Sounds good. Let’s check back in a year. I’d love to get an update!
I’ve decided to keep holding onto Financial Samurai mainly because I’m still having fun and want a challenge.
Related: An Early Retirement Master Plan
1 year later and I’m still not regretting it. The amount of quality time I spent with my wife and son was and continues to be amazing and I can feel my son being grateful for spending all my time with him. My relationship with my wife has improved since I can also spend more time with her and pay more attention to her. I’m extremely happy with my decision.
Fun fact, the new business owner recouped the buying price after less than 6 months, he’s already making profit. I’m happy for him and I’m happy he’s keeping my bussines alive.
Hey! I am currently in the process of beginning an IT business (25) in software development (data engineering). I have been working on building businesses for the past few years and spent plenty of time training as a data scientist/statisitician along with development and PM skills.
I was wondering if you could give some tips and advice for how to build and structure the business to be able to consistently profit and then sell.
Ultimately, I would like to be like you and sell or have the business operating on its own so that I can spend more time on people and things I really care about.
I feel like the reward/regret curve might be different for owning a tech firm as a whole, but later on i may realize I want to keep the business, who knows.
Jeez, talk about seller’s remorse.
Dude needs to take a job at Walmart for six months making a $12 / hour and get some life perspective. While I appreciate the sentiment and understand why he thinks that way, I have no sympathy for someone who has the flexibility to do anything with their life but chooses to wallow in self regret and might-have-beens.
Join the Peace Corps, start a non-profit, teach aspiring entrepreneurs, live in Guatemala for a year and build houses. Stop %^@#$ agonizing over all the *imaginary* money that you “lost”. All those pro forma projections are just that – pro forma. It’s just as likely the biz or market could have gone into the toilet within two years leaving him/her with nothing. We all know of highly successful startups that rapidly become not highly successful startups.
After you have achieved FI, think about helping other people reach the same place.
I understand where this guy is coming from, my opinion the issue here is not of loosing the site but that his identity and ego where so attached to the site. 2.3 million is enough cash to set you up for life.
The challenge was for him to find creative ways to deploy those 2.3 in a venue where he is creative and happy. When doing this he could have gone for a different kind of profit rather than for pure $$$.
If this article is about who I think it is, IMO that person is being far too hard on themselves. Easy for an outsider to say, I’m sure, but on paper this person couldn’t have played the game any better.
They sold their site at a fair price, which reduced their risk and created a life-long safety net. And eventually, they built up their new site into an absolute monster, which they can let ride forever now that they have the safety net and experience of the first exit.
One question I’ll pose – if there’s still a void even after the massive success of the new site, why not just ease off the SEO-driven content and focus more on unique content?
In any case, this was a fantastic perspective with a lot of interesting points. The redirection of the old site to generic corporate site had to be brutal and really opened my eyes to one especially tough reality of selling. I’m sure there’s a ton of fantastic posts and writer’s passion that got lost in that transition, unfortunately.
This was a really good post. I particularly liked number 8, and it wasn’t until I listened to your Podcast that the significance of it hit me. It’s one thing to sell your website for $2.8M. But what would someone say if you asked them to sell their community of friends and their status for $2.8M? I bet the answer would be different. Isn’t that the most valuable part?
Yes, having relevance and status is important. After a certain amount of money, more money doesn’t make a difference. But having respect from your peers does matter for most people.
Interesting perspective. It seems like getting the first business rolling is the easiest. Because you don’t realize how much work is required to get it going. It’s like rolling a rock up a hill.
Once you sell, creating a new business is technically easier because of your developed skill set but you might be mentally drained from the last one.
One thing your friend could’ve considered was buying businesses. He certainly had enough cash. It’s much easier to move something that’s already profitable.
He could’ve bought 2-3 business in his niche. Combine them together to build synergies instead grinding out another baby.
I had a friend who sold his business 5 years ago and walked away with millions. He was lost without his baby and it was ran poorly by the new corporate owner. My friend tried and failed at several other new ventures. This year he was able to reacquire his old business for pennies on the dollar because the acquirer no longer wanted it. He couldn’t be happier. He also has no kids.
I have much less emotional attachment to businesses, jobs, real estate or things so selling wouldn’t be a problem for me. Relationships are what’s important to me.
As far as legacy, I think it is far too optimistic to believe that your kids will have any appreciation for what you’ve built or want to participate. I’ve seen too many friends’ parents with real estate empires or other businesses where the kids saw them as a hassle as opposed to an opportunity.
What parents and kids think are cool or beneficial are rarely the same thing.
Selling for top dollar, and then buying back for a huge discount years later would be huge. But once you sell, there’s just no guarantee you’ll ever get it back. The high likelihood is is that you won’t.
I have no illusions that my boy would want to learn about the online business world and be unchained from an office. I fully expect him join the masses and go the traditional route of going to college, working at a job, retiring at 60+.
But that still doesn’t mean I won’t try and introduce him to a new way of living, since I’ve seen both sides. A successful small business has every department out there just like a huge business.
Been in your situation as well, business partners and I decided to sell our company to a corporate. Pay out was round 3 times what we felt company was worth. Hard to say no or at least very strongly consider the offer. Economy was pretty neutral when we pulled trigger. I remain working within the company as an employee now, just without the rigour or responsibilities of having to manage it. Majority of staff have remained which is a BIG reason why I still enjoy the work. I think I can empathise with the feeling of emptiness if I sold and had to leave the people plus avoid the same work for a year.
The thing is you can’t regret retrospectively on these decisions. Trust that you made the best decision with the best info you had at that exact time. Could have and should have are useless thoughts IMO unless you intend to use them in going FORWARD. The experience you gained from the process is very valuable.
With a large payout from selling, what I did was reversed engineered my life. I used it to solidify my retirement process firstly, then to plan backwards to where I am now. Not having to worry about monetary retirement frees your spirit and gives you a very different perspective. If you had held on to your company, anything could have happened but the same goes for you now as well, you are free to allow or make anything happen within the confines of leftover money (since retirement money is not an issue).
Being able to sell your business for 3X what you thought it was worth is HUGE! Don’t discount that, while still being employed and connected to the business.
But selling a business for 50% -80% of what it is worth or eventually was worth is a gut punch.
This is coming from someone who is recovering from a deep feeling of sadness and regret after selling his business a couple of year ago.
As in the investment world, ask yourself this question- would you personally buy this business for the amount a seller is offering to you? If you say yes, it means you have deep conviction about the business. If you are not sure or wouldn’t do that, then it means, you have found the right price.
For online businesses, especially that are platform dependent (SEO traffic from Google, Amazon sellers, Facebook marketers etc), there’s enormous hidden risk. Buyers are more aware of this risk than the sellers. One algo tweak and you could see a massive rout in your business.
Sellers see their 500k or whatever annual income they make continue into perpetuity. Well, even the blue chips trade for anywhere between10 to 15x annual earnings depending on the sector. And they are way more stable than a single trick pony online business.
Would there be regrets if you sell for less? You bet.
Would there be comparisons to what could be if you held on? Absolutely.
IMHO, it’s better to sell a business when skies are all clear and it seems that the business would continue like that forever. That could typically be called a peak. It’s much easier to sell a business that’s been growing at 25% year for the last 10 years than the one that’s stable to slightly declining.
For those who regret selling the business, I always ask this question- why don’t you do it again? If you were planning on working hard to grow the business into something bigger earlier, you can always do it again.
Reading these posts, I have a strange feeling that our host is in a dilemma about this site. He wants to sell but is afraid of leaving money on the table. Well, it’s a totally unpredictable unless you have a definite commitment to grow the business. If you have the intent to grow this business, that intent can be transferred into a new venture. And possibly, you can strike gold again. that’s the rational way of doing things.
You recognize an idea, build into a real thing, grow it and sell it. And then repeat. It’s tougher than it sounds, but then, how easy is it to accumulate millions of dollars?
So my take- if you feel regret after selling early or for less, just start again. And pour your heart into it and then repeat.
Thanks for your thoughts. Can you tell us more about why you sold your business and how life was and how you felt after? Thanks!
I literally just started a blog. I thought about it for a while but after reading your articles I jumped in.
Interesting perspective and feeling on selling your business!!
My business partner and I ran our business for 8 years and sold in 2011 for 8 figures. We were profitable and growing but we got an all cash offer with no earn-out and couldn’t say no to that much money. I put in my year for the integration of the companies and retired in 2012 in my 30’s.
Its funny, when I sold everyone told me I would have all the feelings the writer spelled out in this article, but 8 years later I have had none. It was the right time to sell and I feel extremely fortunate to have sold. Like many people have pointed out, things change in business all the time and be happy when you get an offer that can allow you to be financially independent. I am grateful every single day for selling.
That chapter of my life is closed and a new one is being written. For someone that is use to working 60-80 hr weeks building my business, this new chapter was a lot less stressful. However, like the writer, I seemed to have lost meaning in my life right after the sale. Its a very common tail for people who are financially Independent and not running a million miles an hour to feel this way.
I could have easily gone back to work, started another business like my business partner did and earned millions of more dollars, but why??? Is that what life is about? As Sam has said many times, you won the game why keep playing. That’s my personality anyways, so I found meaning with my family (My wife and kids). I take the kids to school and pick them up everyday. Some of our best talks are on drives to school or athletics practices. Outside of my family I fill my days with learning. Whether its music royalties, home repair or vintage sports cards, my days are full.
My final thoughts are this. Everyone is different in how they react to instant wealth. Don’t have regrets, its wasted time, just move forward and be grateful for what you have. Statistically, you are an anomaly for selling your business for millions of dollars, most people would kill to be in your situation. Realize, there is a lot to life other then work. Your children will only be young once, don’t let the time slip away. Spending time with them will mean a lot more then passing a business down to them that they may not want anyway.
Great Article and Good Luck!
Very cool. Some follow up questions. Did you guys both own the business 50/50? How did you reinvest the proceeds? How old are you guys and what are you doing now?
My worry is that I won’t be able to fill the day as productively during the time my son is in school. What do you do during that time? And you think you would’ve sold the business if you only had to work 25 hours a week on it?
Thx
Yes, we owned the business 50/50. The proceeds were invested mainly in a 50/50 stock/bond ETF (70%) Real Estate (10%) Alt Investments (15%) Cash (5%). My business partner is 48 and he started a new business right after we sold the other one. I rarely talk to him as he is insanely busy. I am 45 and retired, spend most of my days at a Regus just learning about new ideas or my 2 to 3 hobbies.
Yes filling the day can sometimes be a challenge when they are at school. I recommend you find 2-3 things that you are excited about that can take up your time. That’s what I did. On top of learning about new things or ideas I love Vintage Sports Cards and Music Royalties. In the past I learned how to Code for fun, Angel Investing, crowdfunding in oil/gas exploration, crowdfunding staking poker players. Soon I am learning a new language(french) for our family trip to Paris. I usually don’t invest a lot of capital in these ideas but I like to have some skin in the game and I count it as an educational cost.
Now the selling question is a tough one. Selling your business is highly personal decision. You have to make sure you are emotionally ready to try something else. Even if its only 25hrs a week. Do you LOVE what you do? How often do you fail your Sunday test, as they say (Regret going into work after the weekend). It is tough to focus on something new if you are thinking about your part time business. If you LOVE what you do then I would only sell if you got a crazy ridiculous offer from a strategic buyer. If you don’t love it anymore and are doing it for a family legacy, something to do, then I would prep the business for sale and see what happens. Life is too short.
For me it was easy, I was burnt out running that hard for 8 years. I failed my Sunday test 3 years before we sold but I couldn’t get out as it was 2008 and the recession hit. The money we got was definitely more then we were worth, but it was a strategic fit for the acquirer so they didn’t mind paying up.
Good stuff. Selling at a price that you think is above what you think it’s worth is definitely a good feeling. Thanks a no brainer in my book.
I’m not burnt out yet after 10 years. I’ve always had the mantra that if you can speak forever, you can write forever. There’s always something going on and it’s fun to chronicle the journey and see if I can come up with articles that can help other people who face similar issues or problems.
I’m not burned out yet after 10 years. I’ve always had the mantra that if you can speak forever, you can write forever. There’s always something going on and it’s fun to chronicle the journey.
like my old man always say, when you buying a business always ask the why in why the business is being sold, because if the business is profitable then it shouldn’t be sold
The ‘missed out’ logic is flawed…
First, not reinvesting…
Reinvesting int he market comes with great volatility. The more modest cash returns come with little volatility. This wasn’t a ‘loss’ but simply an expression of rational risk tolerance.
Second…
What the business could have become. If it was an online SEO driven business – there’s a high chance it could have gone south in an algorithm update, or from competition.
Third…
In sum count your blessings here – you may have also missed out on a whole lot of additional stress associated with that business and the market.
The math works out per the opportunity cost too at the point of sale. At conservative 6% S&P500 index annual return, one would need $10million to generate the $600K equivalent of the operating profit of the business. I learned a valuable lesson reading this blog.
Always a drag to lose friends, no matter the reason.
There are three main ingredients for adult friendship: 1) context (i.e. blogging FI/RE community); 2) proximity (i.e. as a high-profile blog, they have a reason to come into your daily orbit); 3) timing (i.e. you both are in a place in your lives where you are available for a mutually beneficial friendship)
I feel a lot of empathy and sympathy for the poster, and am no stranger to unwelcome changes in personal relationships. It does help to keep in mind that just about all friendships have a finite duration (i.e. neighborhood playmates, school, sports teams/clubs, work…) and continue as long as it is a win-win.
The ‘regret’ one feels is the ‘absence’; it is natural to try to fill it (drinking, eating), but you have the foresight to see that your temporary choices were not optimal. It is going to take some time, but there is zero productive purpose to dwelling on ‘regret’ for sealing your family’s financial security at age 30. You’ve done an awesome thing, and it will inform your next success.
Congratulations, and continued success on your journey!
Appreciate your perspective on friendships. Having been responsible for my own business for so long, the gain/loss of business friendships doesn’t bother me. But as a parent, the gain/loss of friendships among kids/school/creative activities surprised and hurt me. After decades of feeling mature and successful, to be summarily ejected from certain circles with more pettiness than a middle school gang sucks. Ultimately it shows that human tribalism will always win out. I continue to be a nice guy. Just a wiser nice guy.
Can you elaborate? How do you get ejected from other parents?
Appreciate you, and your self-description. This is a long-time saying, and the most recent person I heard profess this was ‘The Rock’, Dwayne Johnson… “It’s nice to be important, but it’s more important to be nice.” Wish there were more people like you around.
Got a pretty good picture of what you mean by ‘human tribalism’, and others’ seeking-of-status. FWIW, the “power to exclude” is one way to ‘make an example’ of others, and assert ‘power’. Children’s friendships are especially fragile and changing, and the parent/adult relationships premised to their children’s activities (sports, music, theater, Scouting, religious study, etc.) will always be secondary. And it is a drag, when you find out the hard way that “the issue isn’t really the issue.” Hope you continue to be a ‘wiser nice guy’! And let us all watch out for sociopaths!:-)
Your friend wants his cake and eats it RIGHT NOW – a family and self-expression.
He is wired for high self-expression such that it outran the live in the moment his family.
Many above financial successful people, especially the young ones, finds that living in the moment with their young kids and naive spouse (relative to them) is just too mundane for them – life with their family is too slow of a pace.
They justified their self-expression with giving their love ones THINGS (bigger than average life ) affordable from the winnings.
If your kid is younger than 10 years old and you do not enjoy every second of his waking moment with him, you have a wrong priority list.
Self-expression and money has no time limit – you can have it all the way to your last moment of consciousness.
The living in the moment with your young spouse and kids is a time limit!
Although I agree you probably sold a tad bit early, the notion of never selling your profitable business is silly. I sold for $3.5M after taxes 5 years ago after owning for 15 years(very profitably), today the valuation would be less than $500k and you wouldn’t find a buyer at that price because who purchases a falling knife? Life is unpredictable and as an owner you have a great pulse on the industry you are in, taking chips off the table can be a very smart thing to do. When another million won’t affect your lifestyle or comfort level, your time becomes immensely more valuable. If I had stayed I would probably been able to maintain the valuation or grow it, but at 70+ hours a week and it consuming your every thought it just wasn’t worth it. Especially considering I already had a bigger pile of money I was adding this to. If someone is willing to pay you mega bucks for your baby, my advice is sell it but keep a percentage and have a job there if you love it, if it blows up you participate, if it tanks because some snot nose kid (who was all of us at one time) comes up with a better idea and the business tanks you feel pretty smart.
I ran my business for 27-years, sold for 8-figures two years ago, and semi-retired at 49. Other than getting married and having kids, selling was one of the best decisions I ever made. I pinch myself on a daily basis to make sure I’m not dreaming, that’s how happy I am with the decision to sell.
The problem is, it seems that this person sold for all the wrong reasons. He sold for the money.
I sold because I hated what I was doing and needed a change. I thought for many months before selling what I would do if the day actually arrived.
When it did, I celebrated, and haven’t looked back.
I now manage my real estate portfolio of apartment buildings, my investments, angel investments, and write a blog on entrepreneurship and wealth creation.
If you’re thinking of selling your business, make sure you’re doing it for the right reasons, otherwise, you might suffer the safe fate of regret as this individual.
Good luck
Wah!
Thank you for sharing this information. The below is a bit scatter brained and I hope that is alright. It’s Friday night and 17 month old had a sleep regression … argh
We had contemplated the idea of selling our online business. It’s similarly profitable and generates about $750-1m in operating profit. I thought it might be a good idea to at least consider but after reading this I’ve decided to take that option off the table.
As I mentioned above, I had a 17 month old come into this world and doubled down on Systems, SOP’s, Operations, Rhythm of the business, and figuring out ways to repurpose what we already created which was a lot. We’ve created a documentary series, 2 NYT best sellers, online programs, and several hundred pieces of content. We have been able to focus on optimizing everything while also brining in a “COO”. Worst mistake I made in the 5 years was giving people titles. I wish I would have made up some.
Thank you again for taking the time to put your work in the world :)
Warmly,
“Worst mistake I made in the 5 years was giving people titles. I wish I would have made up some.” <– sounds like a great story, would love to learn more!
1 bird in hand is still worth more than 2 in the bush.
Key to happiness:
1. Something to do
2. Someone to Love
3. Something to look forward to
Focus on those things…money comes and goes.
Selling a business of any kind doesn’t sound like an easy decision by any means. I can’t imagine what it felt like when you discovered that the acquirer redirected your site to another business they owned. That must have felt like a knife in the chest. And taxes augh, painful in general but especially brutal on a big number. But all in all you made the best decision you could at the time. Thanks for sharing your story with us and best of luck with your new journey.
I think he sold too early in life. I’m 58 and I’m about to sell my business for 2.7 million. I’m burned out. I could care less what the buyer does with my business.
This is a great article.
In life, every person has a price – and at that time in 2010, it was your friend’s price to get out and seek his new destiny.
In retrospect – he lost money and more importantly lost his identity and purpose – which bring to light the important notion that there is so much more to life than money.
Technically didn’t lose money, just didn’t make as much money as he could have. I remember my wedding day in 2008 like it was yesterday as well.
I wonder what is worse though? Losing $100? Or missing out on $1000 of gains?
I see people buying their way into relevancy all the time. It’s pretty sad and I’m not sure why more people don’t call people out on it.
Having something to do and look forward to is so important. I’m glad you were able to reflect and eventually start something meaningful again.
Sorry you got rich.
Just helped liquidate my brother-in-laws company earlier this year. Had a chance to sell a few years ago and didn’t take it because he thought he could get more. Industry and competition changed immensely. Couldn’t find a seller three years later and closed down.
Just never know.
Thanks for sharing the perspective.
Thank you for sharing.
Having regret is never good, however from my perspective, you made the right move. At least on the financial side.
Sure you could’ve increased your operating income. Sure you could’ve gotten lucky and accurately predicted that the economy would’ve bounced up to this extent when it looked really grim in 2010. But in order to make that comparison, you have to also look at it from the lens of how much your $2.5 million would have been if you invested most of it in real estate or stocks.
So yes, you could’ve gotten a lot more if you held on, while improving the site, but the opposite is also true. Because you sold, you could’ve gotten a lot of return on that sum by doing nothing (if you bought index).
It’s amazing that you were able to sell the website for $2.5 million. Many dream to be in that state, but very few achieve it. You were one of them.
Most people do not realize that you need to have a sense of purpose in life to be happy. The mentality nowadays is that if you just win the lottery or somehow come up with a ton of money, then you can quit your job and live carefree forever.
This is just wrong. Without having something to keep your mind occupied on and an end goal/purpose in mind, there there is no meaning in life.
There is no doubt that having money and having financial freedman is better than the opposite situation. But, there needs to be something that you continue to strive for after you’ve made it.
Thank you for the perspective. Hope everyone has the same takeaway as I did.
Thanks for sharing your perspective. I’m not the kind of person to regret things so I’m pretty sure I won’t regret selling. I’d just move on to something else.
Hopefully, you have a good relationship with your family now. That’s very important.
Wow. I have never owned or sold a business. But I am leaving my job in two weeks and nervous the same things could happen to me. I work so many hours but I am one of the main people, a big fish in a small pond. My new job is a small fish in a big pond, will require me to be away from family (as I do get tired of dealing with three young daughters), and a lot more money. I will be cautious / aware these same things don’t happen to me.
What an incredible perspective.
I do not think anyone could fault you for what you did because that amount of money would cause a lot of people to sell during that time especially when there was a major downturn going on.
That amount of money is hard to turn down especially when there was such uncertainty in the economy.
It does make sense about the emotional Rollercoaster you went on after the sale. My website (which is no where near the level of anything you and Sam have created) is a passion project for me. I was getting a bit dulled by the constant issues in medicine that made everything less fun.
My website was a creative outlet for me and gave me something to look forward to doing (often thinking of content to write throughout the day and anxiously waiting for the time to actually put pen to paper).
It also gave me a therapeutic avenue where I shared some awful mistakes I have made and had great support from the online community.
It is interesting about the void you felt after leaving the community you built, going from someone everyone wanted to just an average Joe. A lot of people say that happens to physicians as well, who get so used to being a respected doctor that they feel depressed when they retire.
I still think you can proudly share your story with your children as not too many people can build a business from scratch. You definitely have a great story to tell and perhaps they can follow your footsteps.
Reading all these responses, I feel incompetent and a failure; maybe a tad bit lazy as well. I do not feel jealous, however, and appreciate all these successful readers sharng their wisdom.
Thats crazy to think of something so intertwined with your life that it leaves a void once its gone. It just shows that sometimes its better to hang onto the create we love for a long time.