No one likes to look at the business they’ve built through a critical lens. As it turns out, though, assessing your shortcomings is one of the best investments you can make. No one knows your business better than you. To fully understand your company, you must also understand its various strengths and weaknesses.
Your company is an investment—in time, energy, and financial resources. The effort and time invested in rooting out your company’s weaknesses is a worthwhile investment. This work will pay dividends now and in the future. It can also help you prepare your business for a future sale. Here are some key areas where weaknesses may appear:
A Flagging Market
A declining market is a significant red flag. You must be aware enough to spot a failing market and react accordingly. If you notice a worrisome trend and believe that revenue sources are declining or may soon decline, it’s critical to branch out, offer new services or goods, find new customers, and get current customers to agree to buy more. These steps show your business can survive even in turbulent times—something buyers are eager to see.
You Rely on Just One Product
If you only offer one product, or one product forms a significant portion of your profits, it’s a major risk factor—no matter how good the product is or how successfully it sells. Diversification boosts stability, and can even help you bring in more customers. New goods and services support you to weather storms such as supply chain disruptions. New products also open new customer channels, helping you to diversify your customer base.
Similarly, customer concentration is an important factor. If you have only a few customers, or if the loss of a customer or two could significantly impact profitability, then your business is very vulnerable. Every prospective buyer will recognize this vulnerability. Finding new customers is a time-consuming investment, but one that is worth the effort nonetheless.
Your Workforce is Aging
Young people are not entering skilled trades. Tool and die manufacturers may soon be left with a critical shortage of skilled workers. Technology cannot possibly replace all of these workers. If your workforce is aging and you’re not recruiting new staff, it can negatively impact your business’s stability and health. You must find ways to address this issue well ahead of any planned sale.
No one likes to perceive their business as weak. Yet every business has a few shortcomings and soft spots. Blindness to these issues does you no favors. Correcting them will. If you struggle to identify your business’s shortcomings or are unsure how to address them, consider working with a business broker. As a skilled professional, your broker understands how businesses sell, and what you can do to get top dollar for your company. Their expertise is well worth the money and offers a significant return on your initial investment.
About Veber Partners
Veber Partners, LLC was founded in 1989 and has operated as one of the premier private investment banking firms serving the Pacific Northwest. The Veber team is comprised of seasoned investment professionals who all have past operational experience and broad industry exposure.
Veber Partners success is driven by its partners’ experience as both principals and as advisors, combined with their transaction skills gained over many decades and around the globe. Small enough to offer senior-level service to every client yet sophisticated enough to manage large, complex transactions, the firm utilizes the analytical tools of the finance industry while managing the emotional stress of any significant financial transaction.