What Are Your Company’s Weaknesses?

Weakness - Ring Binder on Desktop. Office Folder with Inscription Weakness on Black Wooden Desk. 3D.

Every company has some kind of weakness; the trick is to correct them. A common test that shows a good company CEO or president is what perspires in the company after he or she leaves. Few companies may look the same –on paper-, but another company may be more valuable considering the weaknesses of the other companies. Most problems and weaknesses can be mitigated, but some cannot be resolved or fixed. Finding the right buyer and improving the value of your business can become easier after lessening or fixing the company’s weaknesses. Below are a few common weaknesses that cause some buyers to look elsewhere to buy a business.

“The One Man Band”

Majority of small companies was founded by the current president who makes all major decisions. The president probably didn’t develop a succession plan and there is no one that can take that position after the president gets hit by a proverbial truck. Typically a one man band; and this results in the company becoming unattractive to buyers who might be interested in buying the business from you or the business broker.

Declining Industry

The president of the company needs to be smart to recognize the situation of a declining market and make the necessary changes to grow the company. An example of a real-life “smart” company is that made pants, and, later realizing the decline in demand of this apparel item, switched to producing personalized polo shirts. The company can still produce pants but has to have the ability –and foresight- to move into new areas of items.

Customer Concentration

Most buyers have a major concern over the above. It isn’t unusual for a one man band to focus on what made the company a success – one or few major customers. The president has built the relationships over the years of operation. Usually this relationship is seldom transferable. New customers will take time and capital, but it’s certainly a necessary effort needed from the owner should he decide to sell the business through a business broker.

The One Product

Various one man band companies are based, and continually are, on the manufacture and sale of one product or the development and creation of a single service. The –Model A- vehicle created by Henry Ford was a fantastic car but that was all he made. Decided by General Motors, many people were willing to pay for something different. Ford caught wind of this quickly, but nearly went out of business by thinking one model was suitable for everyone.

Aging Workforce/Decaying Culture

Many jobs such as tool and die positions filled with “old hands” doesn’t have enough young people entering the trade. Modern day technology may soon replace those jobs, but that decision has to be implemented and made. No individual wants a business that will have unproductive machine with no one to operate them.

There are multiple areas that can be thought of as company weaknesses. With a Board of Directors or an Advisory can help a one man band to create a succession plan and most importantly – a successor. Before a decision is made to sell the business, the owner should absolutely act on all the above. Whether the current owner plans to keep or sell the business, fixing the business’s weakness is a win-win situation.

If you are thinking of selling your business within the next year or so, the time is now to start. Planning for the future can significantly add to the selling price. Visiting a professional business broker is the first step.