Supplier risk can erode the value of your company. When a potential acquirer examines your business, they look for red flags. A major one: relying too heavily on a single supplier—whether that’s a sole raw material provider or a platform like Amazon that controls your primary sales channel. If that key supplier vanishes or changes terms, your profits might vanish as well. This risk often leads to lower valuations in the eyes of buyers. Why Supplier Risk Hurts Valuation Over-dependence on one supplier—or on a single selling channel—makes you vulnerable. Buyers don’t like gambling on a business that hinges on factors outside the owner’s control. If an online marketplace tweaks its algorithm or suspends your account, your revenue may plummet. Acquirers see this fragility and adjust their offer downward. Adi Gullia’s Diversification Example Entrepreneur Adi Gullia saw this firsthand. He built his beauty brand, Grace & Stella, on Amazon’s platform. At first, it looked like a goldmine—his foot-peeling mask soared to $100,000 in monthly sales within nine months. Yet Adi recognized the risk. He knew Amazon could change rules or restrict listings at any moment, putting his entire business at risk. Instead of waiting for that to happen, Adi expanded. He forged relationships with subscription box partners to reach new customers outside Amazon’s control. Next he launched his own ecommerce site, selling directly to consumers. Adi also ventured into retail, signing a major deal with Target. These partnerships allowed him to diversify his revenue streams and build a more resilient business. Retailers like Target appreciated Grace & Stella’s success on Amazon, which served as proof of demand. By reducing his dependence on any single channel, Adi created a business that acquirers found far more appealing. The Impact on Valuation When it came time to sell, Adi’s diversification efforts paid off. His company fetched a valuation of 5.8 times EBITDA—a significant premium over what a typical Amazon reseller might expect. Most Amazon-only brands are valued at three to four times EBITDA, reflecting the higher risks tied to their reliance on the platform. Buyers of Amazon-centric businesses worry about potential account suspensions, de-listings, or increased competition driving down margins. Adi’s diversified revenue streams mitigated these risks, making his business more stable and attractive to acquirers. Practical Steps to Lower Supplier Risk 1. Add Channels: If you rely on one marketplace, consider starting your own ecommerce store. Test alternative platforms or retail partners. 2. Secure Multiple Suppliers: If raw materials come from one producer, find a backup or two. Even if your costs rise slightly, you’re buying peace of mind. 3. Build Direct Relationships: Capture customer data through your own site. Invest in ways to reach buyers directly—email, social media, subscriptions—so no single platform can cut you off from your audience. Conclusion  Supplier risk is a value killer. Buyers pay less for a company balanced on a single weak pillar. Don’t let one supplier or one platform control your future. Take a page from Adi Gullia’s playbook. By branching out to retail with Target, leveraging subscription boxes, and launching an ecommerce site, he reduced his supplier risk. These moves not only stabilized his business but also helped him command a premium valuation. At 5.8 times EBITDA, Adi’s sale was far above the norm for Amazon resellers—proof that diversification strengthens both your business and its ultimate value.

Have you ever considered that knowing too much about your company’s product or service could be a disadvantage? Sometimes, not being a technical expert can help you avoid a common trap many founders fall into. Carrie Kelsch, who founded A Plus Garage Doors in 2005, had no experience in garage door repair. Instead of seeing that as a disadvantage, she turned it into an edge by focusing on growth, leadership, and building a high-performing team rather than getting stuck in the technical side of the business. “I didn’t, and I still don’t, know how to fix a garage door,” she says. Instead, Carrie leaned on her team to handle operations so she could dedicate her energy to marketing and growth. This approach reflects the advice in Michael Gerber’s The E-Myth Revisited: to work on your business, not in it. Not Getting Taken Advantage Of You might worry that if you don’t understand the technical side of your business, employees or vendors could take advantage of you by claiming tasks take longer or cost more than they actually do. To address this, consider tying key employees’ compensation to your company’s long-term success. One powerful strategy is implementing phantom equity. This gives employees a stake in the financial upside of your business without transferring actual ownership. It ensures their decisions are aligned with your goals and motivates them to contribute to the growth of your company. Carrie used a similar approach, rewarding loyal team members with phantom shares. This gave her team a sense of ownership and accountability, which helped her retain top talent. With her team handling the delivery of their service and aligned to the company’s success, Carrie was free to focus on growth. A Transformative Exit In 2024 Carrie sold a majority stake of A Plus Garage Doors to Guild Garage Group, a private equity-backed roll-up in the home services space. Guild valued her business at approximately $70 million, recognizing the strong financial foundation and brand she had built. This deal allowed Carrie to take significant capital off the table while keeping a stake in the company’s future growth. It’s proof that you don’t have to master every technical detail to build a business worth millions. Carrie’s journey shows that you don’t need to be a technical expert to succeed. By focusing on growth, empowering your team, and aligning incentives with performance, you can build a valuable asset that attracts buyers or investors. Working on your business—not in it—frees you to focus on the big picture, turning what might seem like a disadvantage into a competitive edge.  Your business is more than the product or service it offers. It’s a system, a brand, and, ultimately, an asset. Sometimes the less you know about how the sausage is made, the better.