So say more about this : "I'd like to focus my attention on other ventures."
2 emails a day? 4-8 hrs of ops work per quarter? That is a pretty trivial amount of 'distraction' (compared to say raising a child while working).
So this is where I get lost, if this is true it would be trivial to actually hire someone to be your email responder (they can be anywhere, so someone with a detailed FAQ and a solid command of the English language (or what ever is the primary language of your users) could do this for maybe $7500/year. (that is paying them $20 for each email they answer) And a contract sysadmin, say with an open contract at $150/hr that 8hrs per quarter is another $4,800/yr so call it $12,500 in 'additional expenses' taking that from your revenue nets you on the order of $60K / yr still rolling into your bank account and you have 99% of your time to work on other stuff. (you'll still have to 'watch' things but you don't have to 'do' things). I'd love to know why you are selling it.
That said, one way to price this is to consider what the expected rate of return is. So given our $60K/year revenue you could invest $180,000 have it make zero interest and withdraw it at $60,000 a year and in 3 years you would be out of money. Personally, I'd consider anything over $180K to be too much to pay for this business. But the assumption is that I am only confident that the business will run reliably under new ownership for 3 years. On a regular investment instrument I'd want to know what the final value was (at the end of the term) and a pessimist will assume zero and an optimist with assume they can re-sell the business for what they paid for it. If you are an optimist you might ask "how much can I invest, at what rate, to give me a net $60K/yr return?" Well at 5% simple interest that is $1.2M. Since we're not counting taxes in our 60K number we'll assume that both returns can be 'income' grade (which is to say taxed as regular income). If you can show that the business has a 20 year lifetime then something along those lines would inform a higher valuation.
So my advice to you on pricing a business is to ask this simple question, "What other choices does someone have which can get them this return at a comparable risk over this time frame? And at the end of the term how much value is 'left'?" That is the key to understanding what is a 'good' price vs an 'unreasonable' price for a business.
> So say more about this : "I'd like to focus my attention on other ventures."
Yes, maintaining this on my own is trivially easy. Then you went on to describe hiring people, managing contracts, etc. etc. That is exactly what I _dont_ want to deal with. This isn't about money, this is about having short term capital to focus on something I'm truly passionate about (not this side business).
The fact is, while I still own this business, I'm still responsible for support and maintenance. It is trivially easy, but I don't want to do it.
For very interested parties, I'm making it very clear what the business is and doing my best to prove to them this is no scam, there is no "catch." I just want to work on my passion.
> So my advice to you on pricing a business is to ask this simple question, "What other choices does someone have which can get them this return at a comparable risk over this time frame? And at the end of the term how much value is 'left'?" That is the key to understanding what is a 'good' price vs an 'unreasonable' price for a business.
If they did nothing to this business, I'm confident it would continue to churn out the revenue it has been. That being said, I have many ideas to grow this business further, and I've been sharing them with interested parties.
Also, I'm only looking for a buyout of about 1 year of revenue, not 3x. Simple.
2 emails a day? 4-8 hrs of ops work per quarter? That is a pretty trivial amount of 'distraction' (compared to say raising a child while working).
So this is where I get lost, if this is true it would be trivial to actually hire someone to be your email responder (they can be anywhere, so someone with a detailed FAQ and a solid command of the English language (or what ever is the primary language of your users) could do this for maybe $7500/year. (that is paying them $20 for each email they answer) And a contract sysadmin, say with an open contract at $150/hr that 8hrs per quarter is another $4,800/yr so call it $12,500 in 'additional expenses' taking that from your revenue nets you on the order of $60K / yr still rolling into your bank account and you have 99% of your time to work on other stuff. (you'll still have to 'watch' things but you don't have to 'do' things). I'd love to know why you are selling it.
That said, one way to price this is to consider what the expected rate of return is. So given our $60K/year revenue you could invest $180,000 have it make zero interest and withdraw it at $60,000 a year and in 3 years you would be out of money. Personally, I'd consider anything over $180K to be too much to pay for this business. But the assumption is that I am only confident that the business will run reliably under new ownership for 3 years. On a regular investment instrument I'd want to know what the final value was (at the end of the term) and a pessimist will assume zero and an optimist with assume they can re-sell the business for what they paid for it. If you are an optimist you might ask "how much can I invest, at what rate, to give me a net $60K/yr return?" Well at 5% simple interest that is $1.2M. Since we're not counting taxes in our 60K number we'll assume that both returns can be 'income' grade (which is to say taxed as regular income). If you can show that the business has a 20 year lifetime then something along those lines would inform a higher valuation.
So my advice to you on pricing a business is to ask this simple question, "What other choices does someone have which can get them this return at a comparable risk over this time frame? And at the end of the term how much value is 'left'?" That is the key to understanding what is a 'good' price vs an 'unreasonable' price for a business.