10 weaknesses of a business every owner should fix before selling

Even the most profitable businesses can have areas that need improvement before a sale, but the good news is that many of these weaknesses are fixable. By addressing these issues early, you can increase the value of your business and attract more competitive buyers.

We cover the 10 most common weaknesses buyers look for when you’re selling a business and how to tackle them, including:

1. Poor quality or inconsistent financial information
2. Overestimating business value
3. Falling performance during the sale process
4. Weak systems, processes, or documentation
5. Poor timing in business sales
6. Ineffective marketing of the business for sale
7. Legal mistakes in selling a business
8. Tax mistakes when selling a business
9. Emotional mistakes in selling a business
10. Negotiation errors that undermine deal value

We also cover:
• How to fix business weaknesses before selling
• FAQs about business weaknesses and selling mistakes

What buyers mean by ‘business weaknesses’

During the due diligence stage of a business sale, buyers look for anything that could increase risk or uncertainty once they take ownership.

All businesses have weaknesses, but those that affect finances, operations, or future growth are most likely to reduce buyer confidence and impact the value you receive.

For example, buyers will typically flag risks or red flags such as:

• Financial: inconsistent management accounts, unclear profit trends, or differences between cash flow and reported profits
• Operational: undocumented processes, informal decision-making, or key knowledge that isn’t clearly documented
• Future growth: customer concentration, weak market positioning, or limited evidence of sustainable growth

Internal vs external business weaknesses

• Internal weaknesses include inefficient processes, unclear reporting, or knowledge and responsibilities that aren’t formally documented
• External weaknesses include weak market positioning, customer concentration, or sector-specific risks

When selling Infrastructure Gateway Ltd, KBS focused on factors buyers typically examine closely during due diligence, such as market position and sector credibility. By highlighting the company’s accredited utility service credentials and strong regional client base, KBS helped address these areas and reassure buyers, supporting a competitive process that led to the successful sale to South Staffordshire Plc Group.

Why certain business weaknesses are penalised more

Some businesses naturally attract closer attention from buyers during due diligence – not because they are weaker, but because certain weaknesses leave fewer layers of information, documentation, or diversification for buyers to rely on.

Where this is the case, buyers simply need clearer evidence that the business is well-run, transferable, and sustainable post-sale.

Common factors that can lead to increased scrutiny include:

• Less formalised processes or documentation
• Greater customer or revenue concentration
• Leaner management or operational structures
• Limited historical data to support future performance

In transactions such as the sale of Infrastructure Gateway Ltd, KBS addressed this scrutiny by clearly evidencing the company’s market position, accredited utility service credentials, and strong regional client base. This helped reassure buyers, support a competitive process, and ultimately deliver a successful sale to South Staffordshire Plc Group.

Financial weaknesses that kill business valuation

When buyers review a business, the first thing they want is financial clarity. Any gaps in reporting, inaccurate valuations, or poor profit performance can cause them to lose trust.

Preparing your business financially for sale

The video below outlines how financial preparation can help reduce common weaknesses that buyers penalise during a sale. Addressing financial issues early supports valuation expectations, improves buyer confidence and helps prevent problems being uncovered later during due diligence.

1. Poor quality or inconsistent financial information

One of the biggest weaknesses of a business to address before selling is having your financials shrouded in mystery. This includes matters such as:

• Out-of-date accounts: using old accounts or submitting incomplete financials kills buyer trust
• Weak management reporting: lack of regular reporting makes it hard for buyers to see positive trends or profitability
• Cash vs profit confusion: buyers are wary when cash flow and reported profits don’t add up

Ensuring your financial information is complete and fully transparent helps prevent issues being flagged during due diligence, avoiding common mistakes in business sales and building buyer trust.

2. Overestimating business value

When preparing to sell, it’s important that expectations around value are realistic and aligned with current market conditions. In many sectors, future growth potential plays a significant role in how buyers assess value, particularly where there is a clear and credible plan for expansion.

This is where working with an experienced business sales adviser matters. Having advised on the sale of thousands of businesses across all major sectors for over two decades, KBS brings a deep understanding of how buyers assess both current performance and future opportunity.

Our advice is grounded in real transaction experience and close alignment with the market, helping businesses position themselves effectively and maximise their chances of achieving their true value.

3. Falling performance during the sale process

Even strong businesses can see performance dip during a sale process if focus shifts away from day-to-day operations. Buyers will notice changes in momentum, delivery, or key performance indicators and may adjust their offers or use this as leverage during negotiations.

The common risks of this situation include:

• Owner distraction: time spent managing the sale can impact operational focus
• Loss of momentum: slowing performance can weaken buyer confidence
• Reduced leverage: buyers may challenge forecasts if performance softens

This is why many owners choose to work with an experienced adviser during a sale process. Having support in place can help ensure the transaction is managed effectively, allowing owners to remain focused on day-to-day operations and maintain performance throughout the sale.

Operational weaknesses buyers see as high risk

Think about this from a buyer’s perspective – a business that runs smoothly with clear processes, documented responsibilities, and consistent delivery is more attractive to buyers. Operational gaps are red flags, as they represent increased risk.

4. Weak systems, processes, or documentation

Businesses that run consistently and predictably are the ones buyers keep on their radar. Weak or undocumented processes are another thing that alerts buyers to the risk of disruption if key knowledge or processes are not clearly documented.

From a buyer’s perspective, operational weaknesses can often include:

• Undocumented processes: day-to-day tasks rely on memory rather than clear instructions found in a procedure document
• Informal decision-making: lack of clear policies or guidelines in place
• Inadequate customer service: poor reputation creates a higher risk

By addressing these common business sale weaknesses before going to market, you reduce risk in the eyes of potential buyers and ensure a smoother due diligence process.

Strategic & market weaknesses that reduce buyer interest

Even if your business is well organised, it can struggle to attract buyers if the timing or sale strategy is wrong. Strategic and market factors don’t always reflect the quality of the business itself, but they can significantly influence buyer demand, deal terms, and the final valuation of a business.

5. Poor timing in business sales

Poor timing in business sales can have a major impact on buyer interest and their perceived value of your business. An experienced adviser can help sense-check whether the timing is right and advise on how best to position the business for sale, taking current market dynamics into account.

It’s also important not to delay selling for ‘one more year’ in the hope that performance will improve, especially if you don’t have a strategy in place to drive it.

6. Ineffective marketing of the business for sale

Marketing your business sale properly is crucial for boosting competition and strengthening your negotiating power. Common marketing mistakes when selling a business include:

• Depending on one buyer: having fewer options means less leverage
• Off-market approaches: flattering, but buyers often intend to secure a discounted deal and avoid competition
• Taking a DIY approach to the sale: going it alone or not involving a business sales adviser can limit your reach and reduce competitive tension

For example, KBS Corporate generated interest from 101 potential buyers for Wavehill IT Solutions, resulting in multiple offers and stronger negotiating power – demonstrating how effective marketing can overcome the risk of relying on a single potential buyer.

Legal, tax, and deal structure weaknesses

Legal and tax issues rarely improve during a sale process – it’s far more likely they’ll surface later and cause delays or even compromise the deal. Buyers expect these areas to be handled professionally, so issues here can negatively affect deal terms and overall value.

7. Legal mistakes in selling a business

While they’re usually caused by poor preparation rather than intent, legal mistakes in selling a business are among the most disruptive issues sellers can face.

Typical legal issues to watch out for include:

• Undisclosed issues: unresolved disputes, informal agreements, or missing documentation
• Lack of warranty awareness: sellers not fully understanding the warranties they are handing over, or the risks involved
• Poor heads of terms: vague or incomplete agreements that lead to disagreements down the line

These mistakes in business sale contracts can result in delayed completions, price renegotiations, or increased post-sale liability, which are all outcomes that sellers want to avoid.

To minimise these risks, early involvement from experienced business sale advisers and legal professionals is important. With the right support in place, potential legal issues can be identified early, documentation strengthened, and the sale process managed more effectively, helping to reduce delays and avoid unnecessary disruption later on.

8. Tax mistakes when selling a business

Tax mistakes when selling a business are usually caused by leaving planning to the last minute. Small decisions around timing and structure can significantly impact the net proceeds you receive from a sale.

Tax weaknesses can include:

• Timing: selling before qualifying for reliefs or allowances
• Structure: choosing the wrong deal structure for your individual circumstances
• Lack of early advice: involving tax specialists too late in the process

Addressing tax considerations early can make a significant difference to net sale proceeds. Access to appropriate tax and legal expertise at the right stage helps ensure decisions around timing and structure are considered early, rather than becoming obstacles later in the sale process.

Emotional and negotiation mistakes that undermine deals

Selling a business can be just as much of an emotional transaction as it is a commercial one. When emotions creep in, however, poor negotiation decisions can be made, and even well-advanced deals can stall or collapse late in the process.

9. Emotional mistakes in selling a business

Emotional mistakes in selling a business are common and entirely understandable, especially for founders who have invested years building the company from the ground up.

For many owners, the business is closely tied to their identity and personal success. As a result, emotions can influence judgement and decision-making at critical moments, which is why awareness and good preparation matter.

Emotional pitfalls when selling a business often include:

• Founder attachment: struggling with the separation of personal identity from the business
• Deal fatigue: losing focus or motivation if the process is lengthy
• Late-stage second thoughts: questioning decisions after heads of terms are already agreed

If you recognise emotional pressures early on and have guidance from trusted advisers in place, you can help keep your decisions objective and strengthen your negotiating position.

10. Negotiation errors when selling a business

It’s easy to make negotiation errors when selling a business, especially if it’s your first time doing so. They often happen when sellers underestimate how strategic and experienced buyers can be.

You should avoid the following when negotiating:

• Overexplaining: this can weaken your position or raise unnecessary concerns
• Agreeing too early: finalising terms before full value is established can limit the final sale value and reduce flexibility
• Losing leverage post-offer: allowing momentum to slow after heads of terms are agreed

A disciplined negotiation process protects your company’s value and reduces the risk of last-minute adjustments.

How to fix business weaknesses before selling

Now you know the common weaknesses of a business that can affect a sale, you can take steps to ensure your business is fully prepared before going to market – an approach covered in more detail when considering how to sell a business effectively. Addressing these issues early reassures prospective buyers, speeds up the due diligence process, and helps you secure the best possible deal.

What you can address quickly

Some improvements are relatively fast to implement but have a significant impact on buyer perception. It’s a good idea to focus on:

• Financial clarity: ensure accounts are up-to-date, accurate, and easy to understand
• Documentation: formalise processes, procedures, and key responsibilities for a smooth handover
• Buyer positioning: highlight key strengths, areas for growth potential, and market credibility

Even small, visible improvements in these areas can make your business look far more lucrative to buyers.

An experienced adviser can help prioritise which of these improvements will have the greatest impact on buyer confidence and how best to position them when preparing for market.

What takes longer – and why starting early matters

Some problems in a business can’t be fixed quickly, no matter how motivated you are to sell. These are typically structural or performance-related issues that any interested buyers would want to see resolved over time, rather than just promised for the future.

The following areas usually take the longest to improve:

• Reducing operational concentration: transitioning responsibilities, documenting delivery, and demonstrating the business can operate consistently takes time
• Improving profitability trends: sustained performance over time is more attractive to buyers than one-off improvements
• Diversifying customer base: attracting new clients is a gradual, time-consuming process
• Strengthening market position: building a stronger brand or entering new markets takes time, and rarely delivers immediate results

Buyers can be cautious when it comes to ‘fixes in progress’. If improvements aren’t backed by historical data, buyers may treat them as risky during due diligence.

That’s why starting preparation early, often alongside an experienced adviser, is one of the most effective ways to address long-term business weaknesses, protect value, and reduce negotiation risk later in the process.

Even if you’re not ready to sell immediately, an early conversation can help clarify priorities and start positioning the business effectively for a future sale.

When to involve professional advisers

Many business sale weaknesses arise when owners try to manage the process alone without prior transaction experience. Professional business sales advisers can help reduce risk, protect the value of your business, and keep the sale on track.

You should consider involving advisers for:

• Valuing the business to avoid overestimating business value
• Preparing for sale so weaknesses are found and addressed before due diligence
• Marketing the business to create competition rather than relying on one buyer
• Negotiating terms to maintain leverage

Not hiring a business sales specialist often leads to lower offers, longer sales timelines, and increased risk of the deal falling through. A specialist can handle the sale process behind the scenes, allowing you to stay focused on running the business and keeping performance steady throughout the sale.

FAQs about business weaknesses and selling mistakes