I own a highway construction company that I started in 1997. We do $12 million to $15 million annually in sales and have never had an unprofitable year. My problem is that I don't enjoy the business anymore. I like the income I get out of it (about $165,000 a year) but not the work. I'm 52 and know I could tolerate it for the next 13 years and have a decent retirement, but would I be cheating myself?
One possibility is to sell the company. My three children have shown no interest in the business. But I do have a key employee who has been with me since Day One. I have discussed selling a portion of the business to him, and he wants to buy in. Should I sell to him and gradually phase myself out, auction off the assets, try to find an outside buyer, or grit my teeth and stick it out?
Boredom is an occupational hazard for entrepreneurs, and it can have unfortunate consequences if you're not careful. What's more, it can be very tricky to deal with on your own, leading you to make decisions you'll soon regret. The writer--I'll call him Joe--was wise to seek an outside perspective before doing anything drastic, like selling his business.
In talking with him, I could see that the business was doing much more for him financially than he appreciated. In addition to paying him a salary, the company covers a lot of his expenses, including his car, his insurance, his travel costs, and the money he spends on flying airplanes. (He is an avid amateur pilot.) If you add in his annual bonus, the whole package is worth closer to $265,000 than $165,000 a year. I suggested he sit down and tally up the value of all those perks, so as to have a more accurate picture of what the impact would be if he lost them.
I think that selling the business is a bad idea. Let's assume he can find someone to buy it at the appraised value of $3 million. By the time he finished paying legal and accounting fees, closing costs, taxes, and so on, he would wind up with barely enough money to support himself in his current lifestyle for a few years. Most of that money would be gone before he reached retirement age--especially if he used some of it to start another business.
Fortunately, Joe has an alternative, one that doesn't require him to spend 13 years doing work he no longer enjoys. First, he can turn over day-to-day management to his key employee, whom he wants to bring in as a minority partner anyway. Joe would continue to oversee the operation, but the move would free him up to start a venture. I urged him to choose a business related to one of his passions--say, flying. Joe liked that idea. In fact, he told me he'd already had some thoughts along those lines. So maybe he just needed reinforcement from a disinterested observer. We all do from time to time.