80% of business owners overestimate what their business is worth — and the most common mistake? Mixing personal and business finances.

You might not even realize you’re doing it. But to a buyer, it’s a red flag that screams “This business isn’t ready.”

The Trap: Blurring the Line Between You and the Business

It happens all the time. You run personal expenses through the business to lower taxes — meals, car payments, maybe even a family member on payroll.

That might save you money in the short term, but when it comes time to sell, it hurts you.

Here’s why:

Buyers want clean, predictable profit. If they can’t tell what’s real profit and what’s “owner perks,” they get nervous. Confused buyers lower their offer — or walk away completely.

You might say, “Oh, I’ll explain it all during due diligence.”

But if they don’t trust your books, they may never get that far.

Try the “Add-Back Audit” Framework

Here’s a simple exercise you can do today:

1. 1. Print your last 12-month P&L.
   2. Grab a highlighter.
   3. Mark everything that’s not a true business expense.
      • – Personal travel
      • – Family members on payroll
      • – One-time or non-recurring costs
      • – Non-operating perks

These are called add-backs — things buyers may adjust back into profit if they trust them and if you document them well.

If your add-back list is long or messy, start cleaning it up now. The clearer your profit, the higher your valuation.

Quick Win: Create an “Owner Perks” Sheet

Make a simple spreadsheet with three columns:

• What the expense is
• Why it’s personal or non-recurring
• How much to add back into profit

Keep this updated and ready to show any serious buyer. It’s proof your business is more profitable than it looks — and helps you defend your asking price.

Want a toolkit that helps you prep clean financials and boost your valuation?

Download the free Exit Toolkit and start making smart moves today.