THE BORING BUSINESS
CHECKLIST

Compare to P&L statements. Flag discrepancies between reported income and bank deposits.

Revenue growing, flat, or declining? Monthly granularity reveals seasonality and one-time spikes.

How much is owed and how old? AR over 90 days is often uncollectable.

If one customer is >20% of revenue, that’s a single point of failure you’re buying.

Recurring revenue (contracts, subscriptions) is worth more than project-based work.

Owner perks, one-time expenses, and above-market rent to self are legitimate addbacks. Inflated addbacks are the #1 red flag.

How much cash does the business need to operate month-to-month? This affects your post-close liquidity.

Old equipment = near-term capex. Factor replacement costs into your offer.

UCC filings, tax liens, and equipment loans transfer or must be paid at close.

Frequent claims signal operational risk. Check 5-year loss runs.

Cash-basis books hide timing differences. Normalize to accrual for accurate EBITDA.

Add back excess owner salary and perks. This is your real EBITDA baseline.

Confirm LLC/Corp is in good standing with the state. Check for name disputes.

Any lawsuits, disputes, or regulatory actions. Check court records independently.

Assignment clauses, auto-renewal terms, and cancellation provisions matter for transition.

Does the seller have restrictions? Do key employees? What about your own post-close?

Confirm the business owns its name, logo, domain, and any proprietary processes.

If the business rents its space, the landlord must approve the assignment. No approval = no deal.

Some licenses transfer, some don’t. Contractor licenses often require new applications.

For property-based businesses: Phase I environmental assessment. Cleanup liability is expensive.

W-2 vs 1099 classification. Employment agreements. Non-competes on key staff.

OSHA violations, health inspections, industry-specific regulatory actions.

If one person holds all the relationships or knowledge, that’s your biggest risk.

What percentage of customers return year-over-year? High churn = marketing treadmill.

Are supplier terms transferable? Any exclusive arrangements at risk?

What software runs the business? Are licenses transferable? How dependent on specific tools?

Well-maintained equipment = lower near-term capex. Missing records = assume the worst.

Documented SOPs mean the business runs without the owner’s head. Undocumented = owner-dependent.

Workers comp claims, safety violations, and incident reports from the last 3 years.

How does the business ensure consistent service? Customer feedback mechanisms.

Understand the revenue cycle. Buying a seasonal business in peak season inflates apparent performance.

Is the business running at 60% capacity or 95%? Headroom = growth opportunity. Maxed out = capex needed.

Total addressable market in the service area. Room to grow or already saturated?

Who else operates locally? Their pricing, reputation, and market share.

Is the industry growing, stable, or declining? Check IBIS, BLS, and local economic data.

Who are the customers? Age, income, location. Are demographics shifting?

Google reviews, BBB rating, Yelp. Reputation is the hardest thing to rebuild.

Can the business raise prices without losing customers? Low-cost competitor pressure?

What stops a competitor from starting tomorrow? Licensing, capital, relationships, reputation.

New regulations that could impact costs or operations. Check local government agendas.

3-6 month minimum. Seller should introduce you to every customer and vendor.

How and when to tell customers about the ownership change. Too early = flight risk. Too late = trust issue.

Key employees need to stay. Retention bonuses, equity, or clear growth paths. Plan before close.

Vendors need to update accounts, payment terms, and contacts. Coordinate with close date.

DBA filing, social media accounts, Google Business Profile, directory listings.

Domain registrar transfer, hosting access, email accounts, and admin credentials.

The business phone number is a customer asset. Port it — don’t get a new one.

New policies effective at close. No gap in coverage. Update certificates of insurance.

Electric, water, gas, internet, waste. Transfer before close to avoid service interruption.

New business bank account. Update payment processors, ACH details, and auto-pay customers.