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Buying a Business? Do Your Due Diligence!
Show Notes Page: https://www.thehowofbusiness.com/618-buyer-due-diligence/
Buyer due diligence is your primary protection when purchasing a small business, and on this episode Henry Lopez walks through a practical checklist to verify the financials, uncover hidden risks, and avoid overpaying for or buying the wrong business.
Get your FREE DOWNLOAD: Buyer Due Diligence Checklist – from the show notes page for this episode.
Buyer due diligence is the single most important protection you have when purchasing a small business. And skipping or rushing it is how buyers end up owning problems they never saw coming.
Buying an existing business can be one of the fastest paths to successful ownership. You inherit customers, cash flow, systems, and employees, ideally in a proven, profitable model. But things are not always as they appear. A business that's always busy or generating strong revenue isn't necessarily healthy, and you may be inheriting problems that aren't obvious at first glance. Due diligence is how you find those issues before closing, not after.
In this episode of The How of Business, Henry Lopez walks through his buyer due diligence checklist. This checklist includes the key areas you need to investigate, the mistakes that trip up first-time buyers, and how to make sure the business you're paying for is actually the business you think you're buying. Whether you're preparing to buy or getting ready to sell, this is the framework for looking under the covers with confidence.
Henry frames the whole process around an old proverb: trust but verify. A good seller isn't lying to you, but it isn't their job to protect you either. They'll naturally highlight what's great and will likely remain quiet on what's broken. Verification is your job, along with your team of advisors: a business coach, a CPA, and an attorney working together.
He explains why due diligence must be a written condition of your letter of intent or purchase agreement, giving you a defined period and the legal right to walk away. Never waive it, and never buy a business "as is" the way you might buy a used car. He also reframes the three possible outcomes of the due diligence period: 1) the deal is confirmed, 2) the price or terms get renegotiated, or 3) you walk away.
He covers deal structure (why most small business deals are asset purchases and why that's safer for the buyer), and how to validate earnings using seller's discretionary earnings rather than revenue. Because you're not buying sales, you're buying verified profits and the assets that produce them. He shares the typical one-to-three multiple range and warns against buying an unprofitable or owner-dependent business, where you may simply be buying yourself a lower-paying job.
Henry then explains the core investigation areas: legal (good standing, who actually has the right to sell, and the lease traps that can quietly kill a deal), financial (three to five years of statements, reconciling the real flow of cash, and treating unexplained errors as red flags), operational (systems ownership, owner and customer concentration, key-employee retention, and worker misclassification), plus market and risk factors like insurance, regulatory triggers, SBA loan conditions, and franchise approvals.
His closing reminder says it best: "A no that you discover in due diligence is far cheaper than a yes you regret." Slow down, demand complete access, and the deal you clearly understand is the only deal worth doing.
This episode is hosted by Henry Lopez. The How of Business podcast focuses on helping you start, run, grow and exit your small business. The How of Business is a top-rated podcast for small business owners and entrepreneurs. Find the best podcast, small business coaching, resources and trusted service partners for small business owners and entrepreneurs at our website https://TheHowOfBusiness.com

Deciding between remote, hybrid, and in-office work is one of the toughest calls small business owners face today, and HR expert Claudia St. John shares how to choose the model that fits your team while staying legally compliant.
Show Notes Page: https://www.thehowofbusiness.com/617-claudia-stjohn-remote-workers/
Small business owners are still wrestling with one of the most consequential management decisions of the modern workplace, and HR expert Claudia St. John, founder and CEO of The Workplace Advisors, returns to help them get it right.
Remote, hybrid, in-office? Years after the pandemic forced the question, there is still no single right answer, and the wrong choice quietly costs businesses in productivity, culture, retention, and even legal exposure. What works for a large tech company may be exactly wrong for your small business, and copying someone else's policy is not a strategy.
In this episode of The How of Business, Henry Lopez is joined by Claudia St. John to explore how small business owners should think through the remote-versus-hybrid-versus-office decision and how to make whichever model they choose actually work.
Claudia is a keynote speaker, best-selling author, and the founder and CEO of The Workplace Advisors, an HR consulting, recruiting, and training firm that specializes in helping small businesses. As one of Henry's trusted service partners, she is who he refers his own clients to for HR support and compliance, which makes her a credible guide through a decision most owners are still making by gut feel.
The conversation opens with the current state of work: a "frozen labor market" where economic uncertainty has businesses reluctant to hire but unwilling to lay off, sitting on top of a longer-term demographic squeeze as baby boomers exit and fewer younger workers replace them. Against that backdrop, Claudia unpacks what the data actually say about remote work including the finding that full-time remote employees are often more productive but noticeably less happy and more isolated.
She and Henry dig into the human cost of going fully remote: the loss of collaboration, the subtle body-language signals a manager can't read over video, and how distance can quietly turn departments adversarial.
"When you're not encountering each other regularly, you lose empathy toward what somebody else is experiencing," Claudia notes.
A surprising theme emerges: the younger workers everyone assumes want to stay home actually crave connection and flexibility, not isolation.
From there the discussion turns practical: why regular cadence meetings matter even when there's "nothing to talk about," why accountability is really a problem of clear expectations rather than physical presence, and the legal and compliance traps of employing people across multiple states. Claudia's throughline for owners still stuck on the question is simple — start by asking why, and listen from the bottom up."
This episode is hosted by Henry Lopez. The How of Business podcast focuses on helping you start, run, grow and exit your small business. The How of Business is a top-rated podcast for small business owners and entrepreneurs. Find the best podcast, small business coaching, resources and trusted service partners for small business owners and entrepreneurs at our website https://TheHowOfBusiness.com

Why work expands to fill the time available, and how small business owners can use deadlines, time blocking, and clear outcomes to get more done in less time.
Show Notes Page: https://www.thehowofbusiness.com/616-parkinsons-law-for-small-business/
Have you ever noticed that a task you expected to finish in a day somehow ends up taking all week? Parkinson's Law explains why and understanding it can help small business owners reclaim their most limited resource: their time.
Parkinson's Law is the principle that work expands so as to fill the time available for its completion. Give yourself an entire day to complete an administrative task and it will often consume the entire day. Give your team two weeks to finish a project and much of the meaningful work tends to happen in the final two days. For small business owners, this helps explain why we feel constantly busy, why meetings and projects drag on, and why there never seems to be enough time for the high-value work that actually grows the business.
In this episode of The How of Business, Henry Lopez explores how understanding Parkinson's Law can help you and your team make faster progress and use your limited time more effectively without simply working longer hours.
The concept was introduced by British historian and author C. Northcote Parkinson in a 1955 essay in The Economist. His observation was simple: when more time is available, work tends to become more complicated and consume all the time available. It's a bit like a bigger house that we fill with more stuff. The more time we have, the more we tend to fill it. Give yourself an hour to write an email and you may spend the full hour refining it; give yourself fifteen minutes and you'll likely communicate the same message just as well.
Henry, a self-described perfectionist, is candid about how this applies to his own work, where the pursuit of perfection often produces diminishing returns. The first 80% of a result might take two hours, while chasing perfection can consume six more without making it materially more valuable to the customer.
When work continually expands, the consequences add up: higher labor costs, slower execution, delayed revenue, missed opportunities, decision fatigue, too much owner involvement, and less time for planning and growth. Henry also raises a hard question worth sitting with: does your business culture reward activity instead of results?
The heart of the episode is a set of eight practical tactics for putting reasonable constraints around your work, plus five questions you can ask to right-size any recurring task or project.
As Henry puts it, "Don't just ask how much time do we have. Instead, ask how much time should this result require?"
This episode is hosted by Henry Lopez. The How of Business podcast focuses on helping you start, run, grow and exit your small business. The How of Business is a top-rated podcast for small business owners and entrepreneurs. Find the best podcast, small business coaching, resources and trusted service partners for small business owners and entrepreneurs at our website https://TheHowOfBusiness.com

Technology expert explains how small business owners can leverage AI as a force multiplier while protecting their data, systems, and intellectual property from emerging cybersecurity risks.
Show Notes Page: https://www.thehowofbusiness.com/615-mordy-hackel-ai-cybersecurity /
Artificial intelligence is creating enormous opportunities for small businesses—but it is also introducing new cybersecurity, data, and operational risks.
In this episode of The How of Business, Henry Lopez is joined by technology entrepreneur and KJ Technology founder Mordy Hackel to explore how small business owners can embrace AI, use technology as a force multiplier, and protect their businesses as the technology landscape continues to change.
Mordy shares his entrepreneurial journey from studying economics and working in technology for organizations including the NBA, Sony Music, and Citibank to building KJ Technology, a Manhattan-based managed IT services firm he has been growing since 1998.
Henry Lopez and Mordy Hackel discuss why small businesses should not assume they are too small to be targets for cybercrime. AI is making phishing emails, voice impersonation, social engineering, and other attacks increasingly sophisticated. Small organizations may be particularly vulnerable when they lack established procedures for authorizing payments, sharing sensitive information, or granting access to systems.
They also explore another increasingly important issue: employees using AI tools independently. When employees use personal ChatGPT, Claude, or other AI accounts for company work, businesses may expose confidential information or lose valuable intellectual property and institutional knowledge when those employees leave.
But the message of this episode is not to be afraid of AI. Mordy believes the opportunities significantly outweigh the risks. The challenge is learning how to use the right technology for the right problem.
AI can help business owners think creatively, analyze problems, overcome writer's block, develop workflows, prototype applications, and identify opportunities to improve how their businesses operate.
This episode is hosted by Henry Lopez. The How of Business podcast focuses on helping you start, run, grow and exit your small business. The How of Business is a top-rated podcast for small business owners and entrepreneurs. Find the best podcast, small business coaching, resources and trusted service partners for small business owners and entrepreneurs at our website https://TheHowOfBusiness.com

How he earned his way into leadership, developed a capable management team, and transformed a hands-on family equipment dealership into a scalable business that no longer depends on him for every decision.
Show Notes Page: https://www.thehowofbusiness.com/614-kaiden-routh-growing-family-business/
How do you step into a multigenerational family business, earn the respect of employees and customers, and then change how the company operates without damaging its legacy?
In this episode, Henry Lopez is joined by Kaiden Routh, CEO of Routh Sales and Rentals, a second-generation family-owned equipment dealership with locations in Oklahoma and Arkansas.
Kaiden grew up around family businesses and initially considered pursuing a different career. When he eventually joined the family company, he was not immediately placed in charge. He worked at the parts counter, supported the service department, handled sales, and learned nearly every part of the operation.
That experience helped Kaiden understand the business and earn credibility with employees. However, stepping into leadership created a different challenge: longtime customers and team members were accustomed to bypassing him and going directly to his father.
Kaiden explains how he and his father navigated that challenging transition, established new boundaries, and accepted that the next generation would need to operate the business differently.
Henry and Kaiden also discuss Kaiden's evolution from being the person who solved every problem to becoming a CEO focused on growth, people, culture, customer experience, and the future growth of the company.
This episode is hosted by Henry Lopez. The How of Business podcast focuses on helping you start, run, grow and exit your small business. The How of Business is a top-rated podcast for small business owners and entrepreneurs. Find the best podcast, small business coaching, resources and trusted service partners for small business owners and entrepreneurs at our website https://TheHowOfBusiness.com