Supplier concentration

A restaurant with one produce supplier, a retailer that carries a single brand under an exclusive arrangement, a manufacturer that sources a critical component from one factory overseas — each is exposed to a decision that isn’t theirs to make. If that supplier raises prices sharply, changes terms, or simply stops selling to them, the business has to scramble on someone else’s timeline.

What makes it worse

• No written supply agreement, so the relationship runs on goodwill and history alone
• A sole-source input with few or no substitutes on reasonable notice
• Preferential pricing or terms tied to the current owner personally, rather than to the business
• A supplier who is also, or becomes, a direct competitor

What reduces the risk

A written agreement with defined terms and a notice period matters more than most sellers assume, because it converts an informal relationship into something the buyer can actually rely on. Where a written agreement exists, its assignability to a new owner is the next thing to check — a supply deal that ends automatically on a change of ownership does not carry much value.