Advice: Should I stay or should I go?

[electricfox]

Hey my fellows.

I'll be graduating from Berkeley here in December (can't wait!), which marks a junction of sorts for my business, ElectricFox. EF has supported me throughout my college career, but I never saw it as more than that - a side job. It has really taken off though, now with 2 part-time employees, and there have been talks of a merger with one of my designer leads.

This, my friends, has frightened me somewhat, for I honestly don't enjoy this work much. Sure, it's good money, and if you don't count in all the development, doesn't take a lot of my time.

But ideally, I want to start another business that's more in-line with what I have learned at Cal, that is, systematic innovation (think: IDEO). I guess I'm just scared that if I cross this graduation barrier with my business, I might just end up finding myself 5 years down the road still in the business. And I know I don't want that.

I'm going on a trip after graduation for about 6 months, traveling the globe (thanks ElectricFox!). So my quandry is this: do I keep the business open and give it to one of my trusted part-timers to run as I have been running it all these years? Or should I straight-out sell it?

Here's the basic specs:
- Monthly profit from hosting: $850 (spread over a year), with about 30 clients
(that's very conservative and takes into account all business costs)
- Development profits: Ranging from $1K to 3K per month ($60/hr)
- Entirely automated billing and invoicing system for hosting customers (proprietary php)
- ASP-based proprietary shopping cart system with 5 customers (adds about $30/mo + transaction fees)
-Referrals from PayQuake = about $60/quarter
-Two large designers that refer development to us, which accounts for 75% of development and 80% of new hosting customers. One smaller designer.
- Two part-time employees that handle most of the current php development load at $25/hr.
- All this with absolutely no advertising costs

Selling option:
How much is this business worth? Is it 2-years profit that you're supposed to consider? So, about $40K? Would people buy it for that?

Having someone else manage it:
How much profit is it reasonable for me to retain? What about any new customers they get? If I extend the time for past my vacation, how long can I expect profits to go to me?

A third option: I've been mulling over the idea of "giving back" to the Cal community by starting a business club around ElectricFox. Students like me could take on the responibilities of running the business, and make some money in the process. Would this be feasible? Here again, could I request a certain amount of profit for a specified period of time?

Thanks in advance for your advice!

[admin]

In this market you might be lucky to get 10 months profit.

If it does not take up much of your time I would keep it as a long term side job. Just my 2 cents.

[jmbeach]

Frankly I say keep it, but allow it to be managed by someone you trust. In these uncertain economic times there's something to be said for having an instant business to fall back on.

I ended up taking on a full time position in my field because it was an offer frankly I couldn't refuse, but still have my own business on the side in case anything should happen. Can't be too careful.

Congrats on your success both in business and education!

[bootNumlock]

i like the idea of option number 3. It sounds like you have gained a lot of respect for this side business (whether you enjoy it or not) and that experience alone provides for a great educational experience.

best of luck in whatever you decide and congrats from me as well on being "stuck" in such a positive dilemma

[electricfox]

Some pretty sound advice so far; I'm leaning toward 2 and 3. The last thing I'd want to see happen is for the business to die off under my lead, but I think the 2 or 3 option might be good.

As for both, would retaining 50% of the profits be fair? Low/high?

As for 3, do you suppose it would be wise to incorporate perhaps? Anyone here corporate?

[generic]

you could always refer business to others and reap a good referal fee.

[electricfox]

Since most of my business now is referrals from designers, this would seem a little silly. I know it happens, but it seems so sleezy. :-)

[mresell]

I don't know fox, seems like a personal life choice. Appraising or buying a business is very iffy and risky. If someone else bought it, doesn't mean any customers would stay. But, if your young and you know what you want and your ready to go then you should go for things. The older you get the harder it gets.(no I am not grandma) . However, you also have a responsibility to your customers to do what is right, at least imo. Make a list and check it twice

[Brangwyn]

Personally I'd say keep it, at least until you know for sure your alternatives are financially viable.