Evaluating Your Company’s Weaknesses

By Michael D. Rubin, CEO & Founder · Updated September 2026 · 711 words

The weaknesses buyers react to most are a declining market, an aging workforce without successors, reliance on a single product, too much revenue from a few customers, and a company that runs through its owner. Find them yourself before a buyer's due diligence team does, and you have time to fix them, or at least to explain them on your own terms.

Owners know their companies' strengths well. Weaknesses are harder to see from the inside, especially ones that have been there for years. Evaluating them honestly is one of the best investments an owner can make, whether a sale is two years away or ten.

A declining market

If a major source of revenue sits in a shrinking market, buyers will see it, and they will value the company on where that market is heading rather than where it has been.

The response is to move before the decline shows in your results: add products or services your customers are starting to want, find new customer groups for what you already do well, and sell more to the customers you have. A company that has already begun to shift, with numbers to show for it, reads as adaptable rather than stuck.

Watch for the early signs: fewer requests for quotes, customers ordering smaller amounts, competitors cutting prices to hold volume, suppliers discontinuing lines. Each is far easier to respond to in its first year than in its third.

An aging workforce

Many skilled trades and technical roles depend on experienced people nearing retirement, and fewer young workers are entering some of them. If your company relies on a handful of veterans who hold its know-how, a buyer will ask what happens when they leave.

Address it early: apprenticeships, cross-training, written procedures, recruiting relationships with local schools and trade programs, and equipment or software that reduces reliance on scarce skills. Then show the plan working, with newer employees doing skilled work, before you go to market.

One product, or a few customers

Two kinds of concentration worry buyers. Winning new customers and adding products costs time and money, but it is almost always cheaper than the discount a buyer will apply. See how customer concentration affects company valuation.

• Product concentration. A company that depends on one product or service is exposed to a single supply problem, competitor or change in demand. Related offerings spread the risk and give customers more reasons to stay.
• Customer concentration. When one or two customers produce a large share of revenue, losing either could transform the business. Buyers respond with lower prices, earnouts tied to keeping those customers, or by walking away.

The weaknesses owners overlook

Beyond the classic four, a few others come up again and again. An outside view helps here: a formal business valuation or an advisor's review will show which weaknesses cost the most in value, so you fix those first:

• Owner dependence. Sales, key relationships and decisions that run only through you.
• Records that do not reconcile. Financial statements that do not match tax returns or bank records.
• Deferred investment. Old equipment, vehicles or systems a buyer will need to replace soon after closing.
• Undocumented processes. Knowledge that lives only in people's heads.
• Weak agreements. Customer relationships and key terms that are not in writing.

Disclose what you cannot fix

Not every weakness can be solved before a sale. An industry in slow decline or a customer that is simply too large to replace quickly may remain. In that case, disclose it early and explain it with numbers: what the risk is, what you have done about it and what a new owner could do next. Buyers accept known risks far more readily than surprises, and an owner who raises a problem first keeps control of how it is framed.

What we do with weaknesses

MDR & Associates' pre-exit consulting covers the 12 to 24 months before a sale, when there is still time to address weaknesses and show results. When the company then goes to market, the issues that remain are best disclosed and explained up front rather than left for due diligence. For a broader plan, see the twelve-month plan to prepare your business for sale. To find out where your company stands now, request a free valuation snapshot.

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Questions owners ask next

Should I fix every weakness before selling?

No. Fix the ones that cost the most in value and can be improved in the time you have, and be ready to explain the rest. Some weaknesses, such as an industry in slow decline, cannot be fully fixed; a credible response and honest numbers are what buyers look for.

How do I find weaknesses I cannot see from the inside?

Look at the company the way a buyer would: ask what would happen if you, your largest customer or your most experienced employee disappeared. An outside valuation or an advisor's review adds an objective view, and your CPA can flag financial issues a buyer's accountants would find.