Today we're having a chat about some of the core risks that we see in a lot of businesses that are thinking of selling.
We call it concentration risk.
It relates to is an over dependence on either suppliers, customers or staff.
So take a moment to think about your customers. If you have more than 15% of your revenue derived from one customer, that starts to set up a little bit of a red flag. Once you're getting over 25, and even up to 50%, we've now got alarm bells going off.
If that customer decided to take their business elsewhere, would you be able to keep going with that drop in revenue?
So have a look at your own revenue streams and think about whether you're over concentrated in one area or another.
Similarly with your employees, Does any of the magic that you produce get done by one or two specific employees? I mean, what happens if they get sick or if they happen to leave? What does that do for your business?
Likewise if you are dependent on too few suppliers it could practically cripple your business if one of them went under and could no longer supply those important parts or services that you need to keep your business going. Many businesses have learnt this the hard way during COVID.
If you want to know more about how to diversify some of these risks and minimise them, reach out we'd love to start a conversation.
How we help business owners
At Exit Advisory Group, we help entrepreneurs successfully grow and exit their business. We can help you:
Speak to an Expert on our team to understand more
At Exit Advisory Group we help entrepreneurs maximise company value and exit at the top of their game.
We do this by giving business owners the tools and strategies to design more profitable, efficient and enjoyable businesses to own - that are also less dependent on them. When they choose to exit, they are in the best position to unlock the wealth in their business and be rewarded for their hard work.
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