Company annual revenue is $20k a year.
Equipment for the company is valued at $30k.
Takes about 8 hours of work a month. For around $10k I can completely automate the process and have no more work but still receive the income.
I have an offer for $80k.
Should I? A. Sell B. Hold C. Automate and hold onto that sweet sweet 100% passive income forever passing it to my children’s children’s children
Thank you 🙏
Edit: This companies revenue scales with inflation and its profit margin is set in stone.
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Keep it or automate it.
I don’t see why you sell something that seems so low effort.
Sell it into a family trust for your kids, fully automate, set and forget
Could you get the same ROI with another business?
If it only takes you 8 hours of work per month to profit 20k per year, I’d automate it and keep it forever, especially with the security of a locked contract.
If you automate it and invest everything you make from it I can’t see this being a situation where you lose.
Absolutely sell. 80k now trumps 1700 a month in basically all ways.
Absolutely sell. 80k now trumps 1700 a month in basically all ways.
No, this is wrong.
I get that a sum of money today is worth more now than the same sum of money at a later date. But you’re neglecting that this is essentially a perpetuity and are considering the wrong values. You have to calculate the present value of the expected cash flows to correctly value that stream of income against a lump sum of $80k today.
In perpetuity, the $1700 a month is worth somewhere between ~$102k-170k in today’s dollars, depending on the discount rate selected. A typical discount rate for a small business is between 12-20%.
That’s making a ton of assumptions, including that the cash flow will last forever, but I think it’s difficult to say that $80k is better now than continuing to operate the business and funneling that cash into some other investments that yield a decent rate of return.
A simpler comparison, which you could do for yourself, is to open up a spreadsheet and see what 5% interest does to 80k a year with no additional cash added to the investment over time compared to 20.4k a year every year. Somewhere around year 5, the $1700 a month compounded at 5% annually exceeds the value of 80k growing at the same rate. Note also that 5% is a relatively conservative rate of return.
C. Automate and hold onto that sweet sweet 100% passive income forever passing it to my children’s children’s children.
If you can scale it up and have passive income, why wouldn’t you? Consider if something happens to your primary income source. Having this to fall back on, would alleviate a lot of stress.
B + C
Hold and create the automated version for when you aren’t able to be present for the scheduled maintenance.
Why?
If you want more opportunities that could suit your skill set, you’ll need to stay with the government who might come to you with another contract instead of the buyer later.
There must be a chance of this failing. Nothing lasts forever.
Hold onto this forever.
12 days of work a year for 20k?? I wanna know what type of business you’re running and how I can get involved
i don’t think selling is worth it
I recommend automating for $10k to enjoy hands-free income, considering the time needed to recover the investment through improved efficiency and reduced workload.
I hope this suggestion was useful.