About a year ago, I wrote a little app for the iPhone that has since been downloaded several thousand times, way more than I ever expected. I was just playing around, now I have a pretty popular app. Something even more unexpected came through recently, though: A company wants to buy it, for a lot of money. The largest check I’ve ever gotten was from my lifeguarding job last summer. What should I do before I sell it (if I should sell it)? What should I do with the money?
It sounds like you have been very lucky. Congrats! Everybody dreams about sudden financial windfalls, but they are rare. They can be very exciting, but they can also present a challenge: What do you do with the money? Your (potential) windfall is compounded by the fact that it involves selling something that you built, something that may already be profitable and difficult to let go.
Our first instinct tells us that you should sell. We don’t know why or how apps become hot — nobody knows the formula for popularity. Because your app is hot now, you should seize the opportunity while you have it. But before you do, you should conduct due diligence to determine whether the price you have been offered is roughly the actual value of the app. Use one of the many calculators available online. If they are offering less than what you think it’s worth, ask for more. Furthermore, you’re in school. App-users expect updates, bug fixes, and upgrades, which can all be time-consuming. Selling it will free you of having to keep the app up-to-date.
Finally, you may want to consider the liability risks of running the app as its user base grows. Your users will expect consistent security upgrades, whether that means implementing container security or some form of security monitoring. While larger organizations have the staffing and resources to devote to these types of measures, a one-person shop like you will run the risk of overlooking or missing a crucial aspect of security implementation.
What you want to do with the money depends on your own financial needs, as well as the size of the windfall. Since you are in college, you likely have a tuition bill due in the near future. Whether you are borrowing money or your education is paid for, you probably want to set aside some of that windfall to pay for school and living expenses. You will also want to consider savings and taxes, because you will have to pay taxes on the sale. This allBusiness article contains good advice on how to minimize your tax liability and be sure you’re paying what you should be. Lastly, The Balance suggests creating an emergency fund. While you are less at risk as a student than somebody who is living by their paychecks, having a little cushion money is always good in case, say, that lifeguarding job doesn’t work out next summer.
Once the savings have been taken care of and taxes have been paid, what is the next step? Even the most skinflint financial advice says that you should use some to have fun, usually about 10 percent of the total amount. So, moving forward, do you have any other ideas up your sleeve? If so, you might want to set aside your proceeds from selling your app to build something else. You have obviously been successful, and you have no reason to believe that you can’t be successful again. Critically, you now have money to back you up. Money cannot buy happiness, but it can buy talent. If your next project means finally offering some scratch to a friend whose talent you hit up last time, you’re making a good choice. Letting go may be difficult, but it can also open up opportunities for you and for the people you care about.