…But we had to give up a few things to get it ;)
If you recall, our cash flow has slowly been dissipating over the past handful of months. Mainly due to all our new expenses we’ve got going on these days (day care, rental property, other baby stuff), and the fact we’re living on only one income now, but my online businesses haven’t been performing all that sexily either. And due to this our cash account has fallen all the way from over $60,000 earlier in the year, down to just $21,000. Still a solid number indeed, but not when you’re self-employed and should have at least a year’s worth of expenses saved up.
So over the past few months I’ve been doing some soul searching and figuring out where I kind of want to go with this online stuff, as well as how to pump back up these cash reserves. And the thing that kept popping up over and over again was telling me to sell some of my sites I no longer care about and to get back to focusing on those that are important to me. You know, like Budgets Are Sexy and Rockstar Finance, and especially my re-energized consulting biz which has been super fun and rewarding lately. All of which make money, but all of which could make even more if I spent less time paying attention to the projects I’m no longer passionate about.
(Remember those sticky notes I mentioned were on my wall? With the one that says “Dumb $$$ Money?” Well, that’s the stuff I’m talking about here with these non-core sites I manage ;))
Once I got this idea in my head, I started pitching them around a little to gauge interest and figure out if it was even a possibility to offload them right now. To which I got back mixed results. Some wanted to take them off my hands at a fraction of my asking price (par for the course with business, right?), while others didn’t even want to mess with them anymore due to the constantly changing online scene with Google. Who unfortunately/fortunately has the power to make or break a site within a matter of days with its algorithms.
It wasn’t looking that good, until I heard from an old friend and business partner who mentioned he was looking to “get in the game” again. He had learned of my desire to offload some of my sites I’ve collected over the years, and he was willing to make me an offer that he felt could help the both of us out. In a nutshell, he wanted to buy all four sites off of me at right around my asking price, and THEN pay me a sizable chunk to continue running these sits for him too. That way I’d continue receiving a decent income stream from them going forward (which is obviously a concern of mine), but more importantly he could invest in a purely passive way as I’d be doing all the work FOR him ;)
What this meant in numbers was a $50,000 bump in cash for me for handing over ownership, but then a 50% cut of all future profits as a “salary” for continuing to run them as I have been. An intriguing deal that I eventually accepted after weeks and weeks of thinking it over and discussing with multiple friends and family. AKA my wife ;)
So essentially what I have done was trade ownership and 50% of profits, for $50,000 in cash. A good or bad move, depending on how you look at it:
- I now have $50,000 in cash!!! [UPDATE: Here’s what we’ll be doing with the new $$]
- And still get 50% of all profits from the sites going forward :)
- Which means I can now feel a LOT more safe and secure than we have been lately…And I can start to move on from these sites I no longer care for much anymore tooEspecially since they’ve been trending downwards as far as income over time – something I made sure the new owner was made aware of, and which also was appropriately reflected in the sales price.
- I no longer own the four sites
- I now “lose” 50% of all future profits, which means I need to recoup it elsewhere
- I haven’t freed up ANY of my time whatsoever to do this
- I still have to do my duty and pay close attention to these sites since both my salary AND the new owner’s profits depend on it – as much as I’d prefer to move on
- And lastly, I haven’t freed up any of my time whatsoever! (Have I already mentioned this? ;))
So overall an interesting turn of events, and one I definitely signed up for since cash is our #1 concern at the moment. As well as me wanting to start distancing myself from all those projects I’m no longer that interested in anyways – even though I couldn’t pull the trigger on that completely ;)
Not a perfect plan here, but pretty close to it. The next stage is to figure out what to do after our 12 month contract ends with me working on these sites, which is something I happily signed since it gave both of us ample time to test it out and see how it goes. More of a risk on his behalf than mine, considering I have all the knowledge and he just wants to do things passively, but I’ve promised him I’d help him learn and find him a solid replacement in the event I do end up wanting to part ways later. Which I think is pretty fair?
So that’s the dilly… I offloaded a handful of my sites for $50,000, and continue to make 50% going forward for at least the next full year. All the while *forcing me* to find a way to recoup the 50% loss in the future which was something I strongly needed to get on anyways as I was starting to get complacent. One of the drawbacks of being used to making so much money, only to have it dry up even though you’re still doing the exact same thing in a given day! Crazy how business can be…
What do you think? Smart? Dumb? Am I an idiot for offloading my sites, only to not cut out *any* of my time? Or am I brilliant since I not only still get paid for them, but I STILL reap the rewards of a large chunk of money?? :)
I’ll of course keep y’all updated on how it pans out over time (not like I can avoid it anyways since the success or lack of will be reflected in my monthly net worth numbers!), but right now it *feels* like it was the right move so I have to be happy however it turns out. I took my time to think about everything, ran the numbers over and over again and in different possible events, and every time my gut said it was the smart thing to do. I’d love to get my hands on a crystal ball to prove it, but unfortunately they were all out of them over at Walmart… So fingers crossed!
PS: Before you ask, I cannot disclose the sites I’ve sold :( This kind of stuff is usually locked away in the contracts you sign to make sure nothing funky happens once you offload them. But any time I *can* divulge something you know I will! Like these numbers I was able to today…
[Photo credit: Julian Burgess]
Jay loves talking about money, collecting coins, blasting hip-hop, and hanging out with his three beautiful boys. You can check out all of his online projects at jmoney.biz. Thanks for reading the blog!