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I’ll be honest with you.
The first time I tried to sell a business with rough financials, I felt like I was trying to pitch a sinking boat to someone who wanted a yacht.

You know that awkward moment when you hand someone your P&L and they tilt their head like a confused golden retriever? Yeah. That was me. Sitting across a conference table, pretending everything was fine while silently hoping they wouldn’t notice the profit line dipping like a roller coaster.

But here’s the twist.
You can sell a business with bad financials.
It isn’t pretty, it isn’t simple, and it sure isn’t glamorous, but it’s absolutely doable when you understand how buyers think, how value is really created, and how to present the full story instead of the scariest pages.

Let me walk you through what I learned the hard way, coffee stains and all.

Understanding Why Buyers Still Buy Struggling Businesses

People assume buyers want perfect companies.
Nah. Buyers want opportunity. And opportunity often hides inside messes.

I had a buyer once tell me, “If your business were perfect, you wouldn’t be talking to me.”
Oddly enough, that weird little line made me feel better about my wreck of a balance sheet.

Most buyers looking at companies with weak financials fall into three groups:

1. Turnaround hunters who get way too excited about fixing broken things.

2. Strategic buyers who only care about your customers, brand, or location.

3. Operators who see hidden value you’ve overlooked because you’re exhausted from running the place.

The trick is to understand which type you’re dealing with so you can frame the story the right way.

Turning “Bad Financials” Into a Story That Makes Sense

Bad numbers alone don’t kill a deal.
Numbers without context do.

When I finally accepted that my financials looked like a toddler scribbled them in crayon, I stopped trying to spin them and started explaining them.

I literally said, “Look, these numbers are rough. But here’s why they look like this.”

Then I showed:

• The spike in expenses caused by upgrading outdated equipment.

• The temporary revenue dip after dropping an unprofitable product line.

• The new client contracts that hadn’t yet hit the books.

• The operational mistakes I fixed after learning things the hard way.

Buyers hate surprises, but they absolutely respect honesty.
Your job isn’t to pretend your financials are good.
Your job is to show the buyer they’re fixable.

And trust me, buyers love “fixable.”

Highlighting Assets That Aren’t on the P&L

This part saved me.

Your financials tell one story. Your business tells another.

Here are the things buyers care about that don’t show up clearly in the numbers:

• Brand reputation

• Customer list and recurring clients

• Location or territory advantages

• Specialized equipment or technology

• Strong team members who could run the place

• Untapped markets

• Proven demand with poor execution

One buyer literally ignored half my P&L and said, “Your customer list is worth more than these expenses scare me.”

That was the moment I realized the value in a business isn’t always where you think it is.

Fixing What You Can Before You Sell

Here’s the part where I wish someone had slapped me with a clipboard earlier.

You don’t need to turn your business into a unicorn.
But tightening up a few key things makes a huge difference:

• Clean up your books so they’re readable without a decoder ring.

• Cut obvious waste.

• Document processes so a buyer sees how to run the place.

• Fix any glaring operational issues.

• Replace outdated equipment that causes constant headaches.

I’m not talking about a full transformation. Just enough so buyers see potential instead of problems.

A little cleanup signals stability.
And stability, even small amounts of it, makes buyers breathe easier.

Pricing a Business With Bad Financials Without Shooting Yourself in the Foot

This is the part most owners get wrong.
And honestly, I nearly did too.

You can’t price a struggling business like it’s thriving.
But you also shouldn’t give it away.

The best strategy I found was:

• Price based on assets.

• Add a bump for intangible value.

• Offer earnouts or seller financing to bridge the gap.

Earnouts saved my deal.
The buyer paid a portion upfront, then additional payments if the business hit certain targets.

It felt like saying, “Hey, if this works out like I think it will, we both win.”

Buyers love that sort of thing.
Confidence without arrogance.

Knowing When to Walk Away and When to Push Forward

Selling a business with bad financials requires thick skin.

I had buyers who ghosted me.
One who nitpicked every number like he was auditioning for a detective show.
And one who lowballed me so hard I laughed out loud.

But eventually, the right buyer came along.
Not because I found someone who didn’t notice the weaknesses.
But because I found someone who appreciated the strengths.

And that’s the whole point.

Final Thoughts: Your Business Is More Than Its Worst Numbers

If there’s one thing I learned, it’s this.
Your business is not defined by the rough months, the bad decisions, or the messiest pages of your books.

Buyers aren’t looking for perfection.
They’re looking for a story they understand and a future they believe in.

So if your financials are a little bruised, take a breath.
Tell the truth.
Show the value that doesn’t fit neatly in the spreadsheets.
And remember that someone out there might see potential where you only see problems.

You can sell a business with bad financials.
I’ve done it.
And if my roller-coaster P&L didn’t scare buyers away forever, you’re going to be just fine.

I still remember the first time I tried to sell a business that had more inventory stacked in the back room than I had patience. Piles of boxes, scattered product lines, dusty items I forgot existed. Honestly, it felt like the business version of cleaning out a garage right before you move. You think you’ve got everything handled until you open that last closet and a tower of who-knows-what comes tumbling out.

That’s when I learned something important.
Selling a business with inventory included is not just a sale. It’s a strategy.

And if you don’t handle it the right way, you either leave money on the table or scare off buyers faster than you can say “wholesale value.”

Let me walk you through what I wish someone had told me back then.

Why Inventory Can Make or Break the Sale

Any time you bundle inventory into a business sale, you’re messing with the buyer’s sense of risk. Buyers love clarity. They love predictable numbers. What they don’t love is uncertainty in the form of expired products, dead stock, or items that look like they came from a yard sale.

When the inventory is clean, counted, organized, and current, the buyer feels like they’re stepping into a machine that’s already running smoothly.

When it’s not, they wonder what else you’ve been hiding.

Think of your inventory like curb appeal. You might not be selling the house based on the bushes, but a tidy entryway definitely helps.

Step One: Take Inventory Seriously

I know, I know. Nobody wakes up thinking “I love counting stuff.”
But it matters.

The best thing you can do is create an honest, detailed inventory list. Break everything down by category, condition, and quantity. When I did this for the first time, I was embarrassed by how much dead stock had been quietly staring me in the face for years.

I had items from three product cycles ago that were basically antiques at that point. So I discounted them, cleared them out, and tightened the list. Suddenly the business looked cleaner. More efficient. More profitable.

Buyers notice that stuff. They really do.

Understanding How Inventory Affects the Asking Price

Here’s the part nobody explains clearly enough.

Your business valuation and your inventory value are not the same thing.
The business is priced based on earnings.
The inventory is priced based on cost.

Not retail value. Not what you “feel” it’s worth.
Cost.

This is where owners get tripped up. They think: “Well, I could sell this widget for fifty bucks, so I’ll count it as fifty.”
Nope. If it cost you ten, it’s worth ten.

The cleanest way to price inventory is at cost value. That’s the figure buyers expect. It’s also the one that prevents negotiations from turning into a tug of war.

Should You Bundle Inventory Into the Asking Price or Add It Separately?

This was a lesson I learned the hard way. I used to bundle inventory into the price because it felt simpler. “Here’s the business. Here’s everything in it. One number.” Easy, right?

Until a buyer asked for a breakdown. When they saw how much of the price came from inventory, they wanted to renegotiate the entire package. It was like showing someone the magician’s trick before the performance.

Now? I always separate the two.
Business price here. Inventory cost there.

Buyers appreciate the transparency. You avoid awkward back-and-forth. And it’s much easier to adjust the inventory number if you sell or replenish stock during the negotiation phase.

How to Handle Slow Moving or Obsolete Inventory

Let’s be honest. Every business has “the drawer.”
You know the one. The stuff that just sits there. The customers who almost bought it but didn’t. The products you were sure would be big.

Buyers hate that drawer.

So here’s what you do:

• Mark slow moving inventory down to what it’s realistically worth.

• Move obsolete items out completely. Donate them, sell them in bulk, or get creative with clearance deals.

• Make your inventory list something you’d be comfortable showing to your mother.

A lean, healthy inventory is a selling point. A bloated one looks like a headache.

The Conversation Buyers Always Want to Have

Every buyer asks the same question.
“What guarantee do I have that this inventory will sell?”

This is your chance to shine. Buyers want confidence, not perfection. Talk about your past sales patterns, your turnover rates, your seasonal trends. When I sold a retail business a few years ago, I literally walked the buyer through which products sold best during the holidays. Their shoulders relaxed. They could picture revenue coming in.

You’re not just selling products.
You’re selling predictability.

When to Get Inventory Professionally Valued

If you have a ton of product, especially if some of it is specialty or industry specific, bring in a professional. It sounds fancy, but it’s not. It gives buyers a number they can trust, and it keeps negotiations smooth.

I’ve seen deals fall apart because the seller insisted their inventory was worth more than the buyer believed. A third party valuation solves that instantly. Plus, you avoid looking like you pulled numbers out of thin air.

Don’t Forget the Emotional Side of Letting Go

This might sound sentimental, but it matters.

Selling a business with inventory is strange because you’re not just selling assets. You’re selling years of decisions. You’re selling that batch you ordered during a crazy busy season. You’re selling the leftovers from a product that didn’t quite hit. You’re selling a story.

Buyers can feel whether you resent this process or embrace it.
So take a breath. Show up with confidence and clarity. The cleaner your inventory story is, the easier the sale.

Final Thoughts: Clarity Wins Every Time

If there’s one thing I’ve learned after selling multiple businesses, it’s this.

Buyers will pay more when they understand exactly what they’re getting.

Inventory included or not, the principle is the same. Clean records, clear numbers, honest expectations. That’s what creates trust. And trust is what closes deals.

So if you’re getting ready to sell your business with inventory included, take the time to organize, price correctly, and present confidently.

You’ll thank yourself later.
And the buyer will too.