What You’ll Learn in This Post
Thinking about selling or transitioning your business? In this post, we cover five common mistakes that can quietly lower your business’s valuation—and what to do about them. You’ll learn how everyday decisions affect how buyers, lenders, and investors view your business and discover practical steps to help protect and increase your long-term value.
This is especially important for small business owners in Tacoma and the greater Puget Sound region who want to stay ahead of the curve and keep their business strong, with or without an immediate exit plan.
What to Watch For Before You Exit or Transition
You’ve worked hard to build your business, but when it comes time to sell, transition, or secure funding, many owners are surprised to learn their business isn’t worth as much as they expected.
It’s not just about revenue or reputation. The value of your business depends on how well it functions without you, how transferable it is to someone else, and how predictable its future earnings look to a buyer or investor.
At J. Ott Business Solutions, we’ve worked with many business owners across Tacoma and the greater Puget Sound region who had strong operations—but hidden issues were quietly dragging down their valuation.
The good news? Most of these issues are fixable—if you know what to look for.
Mistake #1: Relying Too Heavily on the Owner
If your business relies entirely on your personal relationships, day-to-day oversight, or decision-making, a buyer or investor will see risk—not value. When key knowledge or client trust lives only in your head, it’s hard for someone else to step in and succeed.
Fix it: Start documenting your role and delegating responsibilities. Build a leadership team or designate key staff members for specific functions. The less dependent the business is on you personally, the more valuable it becomes.
Mistake #2: No Documented Processes
Many small businesses run on habit—but that doesn’t translate well during a transition. If your systems, procedures, and workflows aren’t written down and repeatable, a buyer or successor will see uncertainty.
Fix it: Create written standard operating procedures (SOPs) for your core operations. Include customer service protocols, billing procedures, and vendor relationships. Clear documentation gives buyers confidence and helps your team stay consistent.
Mistake #3: Poor Financial Organization
Unreliable or unclear financial records can sink your valuation—even if your business is profitable. Lenders, buyers, and investors want to see clean, well-maintained financials to understand performance and potential.
Fix it: Work with a trusted accounting professional to get your books in order. Consistent, accurate reporting builds trust and often reveals opportunities for improvement.
Mistake #4: Inconsistent or Unscalable Revenue
If most of your revenue comes from one or two clients, or your income varies drastically month to month, the business can appear unstable. Likewise, if your business model can’t grow without your direct input, it may cap your valuation.
Fix it: Diversify your client base, build recurring revenue streams where possible, and explore ways to scale without adding unsustainable workloads.
Mistake #5: Waiting Too Long to Address These Issues
By the time you’re ready to exit, it may be too late to correct problems without delaying the process or compromising your price. Starting early gives you more time, more options, and less pressure.
Fix it: Don’t wait until a transition or investor opportunity is on the table to think about valuation. Addressing these common issues now can make a big difference in how your business is viewed—and what it’s worth—when you’re ready to move forward.
Want to Know What’s Holding Your Value Back?
We help small business owners across Tacoma and the surrounding region identify risks and opportunities through clear, confidential valuation prep. If you’re thinking about bringing on investors, selling, transitioning, or just want to make your business stronger today, we’re here to help. 👉 Book a consult to start the conversation.