Is Your Inventory Helping or Hurting Your Business Value?
When it comes time to sell your business, inventory is one of those line items that looks simple—but packs a punch. Too many business owners assume it’s just a number on the balance sheet. In reality? It can make or break your deal.
Inventory can be your secret weapon, or your silent killer.
Buyers don’t just want to know what you have; they want to know why you have it, how fast it moves, and whether it’s helping or hindering the health of your operation.
What buyers are really looking at:
Turnover (aka: Is your stock actually selling?)
Inventory is only as valuable as its velocity. If it’s sitting untouched in a dusty storeroom, it’s not an asset; it’s a red flag. Buyers want to see that your products move consistently, that you’ve got systems in place to track demand, and that you’re not just holding stock “just in case.” Fast turnover says: this business is alive and thriving.
Valuation Method (cost vs. sale vs. wishful thinking)
Here’s a spicy truth: how you value your inventory matters just as much as how much you’ve got. Are you pricing at cost? Retail? Fire sale? Each method has different implications, and unclear records here make buyers nervous. Inflated values can backfire, especially if buyers suspect they’ll be stuck with aging or unsellable stock.
Seasonality (what month are we in?)
Selling a retail business in December? Your shelves might be full, but that doesn’t always mean growth. Selling in April? Your inventory might look thin, but be perfectly normal for post-holiday slowdown. Buyers will look at 12-month patterns to assess how your stock levels shift with the seasons. Context is everything.
Common traps sellers fall into:
- Over-ordering before listing, thinking it’ll increase value. It usually doesn’t. In fact, it can slow the sale down while buyers do the math on how much of it might need to be written off.
- Not documenting dead stock or write-downs, which creates gaps in the story.
- Relying on memory instead of systems. Buyers love data. “We usually sell through” won’t cut it. Actual turnover reports will.
Here’s what does work:
- Lean, well-documented inventory
- Clear, justified valuation method
- Historical data to explain seasonality
- Confidence not defensiveness when discussing stock
If you’re unsure whether your inventory is helping or hurting your sale, it’s time to take a closer look. You don’t need perfection, you just need a plan (and maybe a second pair of eyes).
Need a sanity check on your inventory before going to market? Book a call or contact us on 1800 825 831.