The 6 Major Risks That Keep a Buyer of Your Company Up at Night

There are 6 major causes of risk for a potential buyer (see below). Your job is to do everything you can that mitigates these risks and enhances your company’s value.

6 Key Risks from a Buyer’s Perspective:

  1. Management team: How talented are the managers? Will they stay? What happens if one or more leave? Who will lead the enterprise as a whole?
  2. Reliance on owner: Will this business work well without you (the owner) around? Which customers rely on your personal relationship to keep them happy? What banking relationships are based on your personal financials or rapport with a specific banker?
  3. Truth and accuracy of financial records: Are your financial records clean and up to date? Have your financials been audited by outside firms? Are there any warning flags like discrepancies between corporate tax returns, filings, or investor reporting and the company financials?
  4. Customer base (concentration and future prospects): Are the customer relationships with the company or with the owner? Is any one customer so big that the business would suffer if that customer’s orders diminished or went away altogether? What are the future prospects for your key customers? Your industry? Your specific business?
  5. Competition: Where does your company stand in the marketplace compared to your competitors? How will you assure your prospective buyer that sales and market share can grow, not just be maintained?
  6. Industry future: What trends affect your industry? What potential disruptors could kill your industry overnight? What contingencies do you have for these scenarios?

The bottom-line question is this: “Are you taking action to mitigate as many perceived buyer risks as possible over the next two to three years before you sell?”

Mitigating risks is half the equation; the other half is enhancing value. What can you do over the next few years to enhance your business’s value?

  • Can you grow your sales?
  • Improve your margins?
  • Develop protected intellectual property?
  • More firmly establish a brand?
  • Deepen competitive advantages?
  • Build company systems?
  • Grow the management team?

Now it’s time for you to take 60 seconds to list out the top 3 action steps you are going to take in the next 90 days based on what you learned in this article. Do it now!

If you’re ready to get your business out of your way—
the next step is to talk to one of our expert business coaches.

We’ll look at how your business is operating today, what’s getting in the way, and whether there’s a clear path forward.

You don’t need more ideas.

You don’t need to work harder.

You need to understand what’s actually keeping your business dependent on you—and what to do about it.

START WITH A FREE COACHING CALL

Or learn more about what business coaching can do for you

Woman participating in a virtual meeting, taking notes during a video conference on a laptop.

Not ready to talk yet? Start here.

Talking with one of our expert business coaches is the best way to figure out what’s actually holding your business back, but if you’re not ready for that, you can also access our free Business Growth Toolkit, which contains tools and frameworks we are actively using with our clients right now.

  • Learn the exact steps to take to reach passive ownership or selling the business for large multiples
  • Learn how to setup systems and internal controls to run the business for you – while it makes even more profit
  • Get the tools you need to stop the overwhelm and start a straight-forward path to successful scaling

No fluff. Just practical tools you can apply immediately.