What Are Your Flaws? A Self-Assessment for Owners Planning a Sale

By Michael D. Rubin, CEO & Founder · Updated September 2026 · 734 words

The most useful exercise before selling a company is an honest review of its flaws, done the way a buyer would do it: with data, not instinct. Owners naturally focus on strengths; buyers focus on risk. Looking hard at your products, your people, your industry and your customers shows you what a buyer will discount while there is still time to do something about it.

The review does not need consultants or weeks of work to begin. It needs the right questions, a few reports from your accounting system and the willingness to hear an uncomfortable answer.

Why owners miss their own flaws

You built the company, so its quirks feel normal. The customer who has bought from you for decades feels permanent. The veteran foreman who knows every machine feels irreplaceable in a good way. A buyer sees the same facts and calls them concentration risk and key-person risk. Neither view is wrong, but only the buyer's sets the price.

The fix is to step outside your own view. Pull the numbers, ask pointed questions and involve someone who reviews companies for a living. It also helps to set aside the question of whether a flaw is your fault. Most flaws grew naturally out of what made the company succeed, such as a founder who sold brilliantly or one customer who took a chance early. Naming them is not an admission of failure; it is the first step toward a higher price.

Four areas to examine, with the questions buyers ask

• Products and services. What share of gross profit comes from your single best line? What would happen if demand for it fell? What else do your customers buy that you could supply?
• Workforce. Who are the five people the company could least afford to lose? Are any close to retirement? Is anyone trained to cover them? How long do new hires stay, and why do people leave?
• Industry. Is demand for what you sell growing, flat or shrinking? Are customers, suppliers or technology changing how the work gets done, and are you ahead of that change or behind it?
• Customers. What share of revenue do your top customers represent? Are relationships written into contracts or held in one person's phone? Would they stay with a new owner?

The data to pull before you judge

Answers based on feel are unreliable, especially your own. Before drawing conclusions, ask your CPA or controller for these reports, then share the results with someone outside the business, such as your CPA, a board member or an M&A advisor. An outside reader will spot patterns you have stopped noticing.

• Revenue and gross profit by customer, by product line and by year for the last three years
• A staff list with roles, tenure and who covers each critical task
• Customer contracts with their terms and renewal dates
• A short summary of trends in your market, including new competitors and changes in how customers buy

Sort what you find into three piles

Every flaw falls into one of three groups. Some can be fixed within a year, such as documenting processes, cleaning up contracts or cross-training staff; our answer on raising your valuation in the next year lists the fastest of these. Some need longer, such as reducing reliance on one customer or building a management layer. And some cannot be fixed, only explained, such as a mature market.

The third pile still needs work: a clear, honest account for buyers, prepared in advance, with the steps you have taken to limit the effect. A flaw that comes with an explanation and a plan is priced very differently from one a buyer uncovers.

Timing is the reason to start now. Flaws are hard to correct when you are already under pressure to sell because of health, a partner dispute or burnout. Owners who begin the review years ahead can fix most of what they find.

How we help owners run the review

MDR & Associates begins every relationship with a free, confidential discovery meeting in which we review three years of financials and tell you what a buyer would question. Owners who want to fix what we find can use our pre-exit consulting over the 12 to 24 months before a sale, and a formal business valuation is available if you want a documented starting point. For a quick first read of where you stand, request a valuation snapshot.

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Questions owners ask next

How often should I review my company's flaws?

Once a year is a sensible habit, ideally when your annual financial statements are finished. Comparing each review with the last shows whether concentration, margins and staffing are moving in the right direction, which is exactly the trend a buyer will want to see.

Will buyers find flaws I missed?

Probably a few, because they review many companies and bring specialists. The aim of a self-assessment is not perfection but no major surprises. If the big issues are already known and explained, smaller findings rarely change the price.