In earlier Blogs I noted that riskier businesses are worth less. I also identified that risks could be external to, or within (internal) to a business.
This Blog focuses on internal business risks, specifically looking at the categories they fall into and exploring their importance to your business:
The risks to a business can generally be summarised into the following categories:
Business Performance and Growth
Business with a track record of growth give buyers comfort that the business will continue.
Supply of Key Inputs
You can’t sell what you don’t have or can’t make.
This is a business specific concept. It can mean visibility, proximity to customers or suppliers.
Every business faces competition. The question is how aggressive are your competitors and are there any new threats emerging?
Concentration of/or Reliance on Customers
If you have a narrow customer base, you will feel a significant impact from the loss of a customer. This will make potential buyers nervous.
Your business needs to have resilient, well documented systems to avoid the impact of reliance on existing staff.
A potential buyer will be nervous if your key staff leave & take difficult to replace skills of customers with them.
Category - Owner Reliance
A buyer will be concerned that when you leave it may impact the value of the business.
I will be posting more internal business risks next week, so make sure you sign to my blog or follow us on Facebook to access this information. Sign up at the top of the page or follow us on facebook to see the next story!