| Hi HN Community, Really appreciate your brutal honesty on this one. I run a social network in a small niche, and I'm trying to figure out my next steps for this business. Here's the situation: THE GOOD: * My team and I have been running this site for years and have successfully dominated our domain (more traffic than any other site in this space) * Our business is profitable: we expect about $800K-$1M in revenue this year. * We are bootstrapped and thus have no investor obligations. * Costs can be controlled to under $250K each year--maybe much more. * Only 1 or 2 people is needed to keep the business running. * Finally, our business is VERY stable--unlikely for it to be disrupted in the next several years. THE BAD: * I've been working on the site for many years and I'm not emotionally excited about the business any more. I'm proud of what we've achieved, but I want to move on to new projects and learn new stuff. * My team doesn't think there is much growth left in our space (both traffic and revenue). We could start to attack other verticals similar to our space, but I think our team doesn't have the intestinal fortitude to make it happen since we're a little tired of what we're doing. THE CHOICES: Scenario 1: Sell the business - An attractive option if we can get an offer. Our team can get some liquidity for all our hard work. With the right parent company, we may be able to more easily grow our business as well into adjacent verticals with a decent bankroll behind our efforts. However, in this scenario, we may be tied to a retention term of 1-2 years, which keeps us in this domain even longer than desired--this may be okay though at the right price and right company. Scenario 2: Cash cow the business - Since our business is stable, we could stop new development on our site (our biggest cost) and reduce expenses/headcount to a point where the business throws off a lot of cash. Our business is quite stable and I think that we can go several years with decent profits and decent owner's draws. However, in a cash cow scenario we still will need to put in some effort--at least on a part-time basis--to maintain the site; that may be tough for us later on if we're emotionally tired of the business. A Scenario we don't want: continuing 'as is' is not an option for the team. Raising money also doesn't seem right either. * HN community, how would you evaluate a decision to try to sell or cash cow? Are there other options I should be thinking about as well? Thanks very much for your input. Also, if you might be interested in acquiring this business, feel free to reach out at thenext20years [at] gmail [dot] com |
Having it as a cash cow is also cool, and you might be able to sell it in a few years at the same amount, pocketing the cashflow in the meantime.
What I'd do is:
- start transitioning to other people. This will take you in the sweet spot of being able to pursue option 1 and 2.
- get the dividends every month
- get heavy on the lookout for an acquirer
In this way you'll be free to do other things (or party), not be in the pressure to sell for a small amount and be ready for the big payday when it'll come