Five Things Owners Do for Good Reasons That Cost Them in a Sale
Most of what costs an owner money at closing was not a mistake when it was made. It was a reasonable decision by someone running a business, not preparing to sell one. The trouble is that the two jobs reward opposite behavior, and nobody tells you when the switch happens. Here are five of them, all defensible on the day they were made.
1. Running the business for the lowest possible tax bill
Every owner does some version of this, and their accountant is right to help. But you spend years proving the business earns as little as possible, and then one day you need to prove it earns a lot. Add-backs bridge that gap — the personal vehicle, the family member on payroll, the trip that was mostly a conference. They work when they are documented, itemized, and consistent with what the tax return shows. They stop working when they are a list you assembled last month. More value evaporates in the add-back conversation than in the price negotiation, and it is entirely preventable with a year of clean bookkeeping.
2. Keeping the important relationships on a handshake
Your biggest customer has been with you eighteen years and you have never had a contract. Your landlord is a friend. Your key supplier gives you terms nobody else gets because of who you are. That is a well-run business by the standards of a Triangle owner who knows everybody, and it is close to unsellable at full value, because none of it transfers. A buyer cannot bank a relationship they were not part of. You do not need to formalize everything overnight, but the revenue and the terms that matter most should exist somewhere other than in your memory and someone else's goodwill.
3. Being the best salesperson in your own company
You are faster than anyone you could hire, you close at a better rate, and the customers ask for you. So you keep doing it, and every year the argument for keeping it gets stronger. Then a buyer looks at the revenue and asks the only question that matters: how much of this walks out with the owner? An owner producing thirty or forty percent of new business personally is looking at a real discount, and it is not punitive. It is arithmetic. Handing accounts to someone else costs you something in the short run. It costs a multiple point or two if you never do it.
4. Spending on growth and deferring everything else
Given a dollar, most owners put it toward something that produces. The roof, the fifteen-year-old equipment, the software you have outgrown — those wait, because they do not generate anything. Sensible, right up until a buyer's inspection produces a list of deferred items with dollar figures next to them, and every one of those figures comes off your price or lands in a holdback. Buyers do not pay for capital expenditures they are about to inherit. In a smaller deal, where the equipment can be a meaningful share of the asset base, this is one of the largest single adjustments I run into.
5. Never working out your own number
This one is not about the business at all. Owners spend years planning the company's future and almost no time on the arithmetic of their own — what they need after tax, what the proceeds actually have to cover, what the years afterward look like. Then an offer arrives and there is no standard to measure it against. Some owners take a weak deal because it sounds like a lot of money. Others turn down a fair one because they are anchored on a number they heard at a trade show. Both are the same failure. If you cannot say what a good outcome looks like in your own accounts, you cannot recognize one when it is in front of you.
The takeaway
None of these are character flaws. They are the habits of somebody focused on running the business, which is what you were supposed to be doing. But a sale grades you on transferability, not effort, and that grading starts the day a buyer opens your file. The good news is that all five have a lead time. Give yourself a year and most of it is fixable. Give yourself a month and you will be negotiating against your own history.
Thinking about what comes next for your business? Download the free guide — 7 Critical Points Every Business Owner Must Know Before Selling — or book a confidential conversation with Don Emmett. Straight answers from someone who's sat on your side of the table.
