Red flag explained · Verification, age and operations
Called passive, but relies on staff or contractors
Short answer: A listing that calls the business passive while mentioning writers, virtual assistants, developers or other contractors is describing work that someone does. That is not wrong, but those people cost money and may leave with the seller. Ask who they are, what each costs and whether that cost is in the P&L.
When the checker raises it
Raised as medium severity when the text uses words like passive, hands-off or turnkey and also mentions contractors, freelancers, writers, developers, VAs, staff or a team.
Why it matters
Passive usually means passive for the owner, because someone else is paid to do the work. If the contractor costs are in the P&L, the profit figure is honest. If the seller pays them personally, it is not.
Contractors who have worked for the seller for years may not stay for a new owner, or may ask for more.
A worked example
Composite example, not a real listing
Asking price: $70,000
Average monthly revenue: $3,600 (AdSense and sponsors)
Average monthly profit: $2,900
Business age: 3 years
Owner hours: 3 hours per week
Fully passive: a freelance writer and a video editor handle every upload
What the red-flag checker returns: payback of 24.1 months on average monthly profit, and this flag:
Medium Called passive, but relies on staff or contractors
The text describes the business as passive while also mentioning people who do the work.
Ask: Who are the contractors, what does each cost, is that cost in the P&L, and will they stay?
The same example also raises: Depends on YouTube, Mediavine/ad network, No traffic data for a traffic-driven site, No connected data source mentioned, Concentration not disclosed.
What to check
- Ask who the contractors are, what each costs and whether that cost is in the P&L.
- Ask whether they have agreed to stay after the sale, and on what terms.
- Ask for written process documents for what each person does.
Questions to send the seller
- Who are the contractors, what does each cost, is that cost in the P&L, and will they stay?
- Who are the contractors, what does each cost, is that cost in the P&L, and will they stay after the sale?
- Are there written agreements with each contractor, and who owns the work they produced?
- How much of the content do you write personally, and would readers notice a change of author?
Related flags
Useful next
- Buying a YouTube channel
- Free red-flag checker: paste a listing and see which flags it raises.
Get the seller question checklists
Join the FirstPass Memo waitlist and the next page gives you the general seller question checklist (web page and PDF) straight away, along with the other free files: seller question checklists for eleven business types, the 72-hour vetting plan and a deal-tracker spreadsheet. Nothing is emailed; you download them on the page.
We will write when paid memos open, and occasionally before. Unsubscribe any time by replying "stop" to hello@firstpassmemo.com. Looking at a live listing priced $10k–150k? Apply for a free beta memo instead; its confirmation page has the same downloads.
The checker is a set of plain rules, not an AI model, and its flags are prompts for questions, not verdicts. Composite examples are invented. Informational screening only, not investment, legal or tax advice.