SOP #56 — Stress-Test the Buyer Model

SOP #56 — Stress-Test the Buyer Model

Before you sign, model the downside. If you only survive the best case, don't buy.

1. Build three scenarios: base (current numbers), down (-30% traffic), and shock (-50%).
2. For each, recompute monthly net after YOUR real costs, not the seller's add-backed ones.
3. Calculate payback period in each: price divided by monthly net. Over 40 months in the down case is a no.
4. Model one algorithm update hitting in month 2. Can you still service any acquisition debt?
5. Factor your time at an hourly rate. A 'passive' site eating 15 hours a week isn't passive ROI.
6. Set a recovery budget — cash you'll need to fix a post-purchase dip without panic-selling.

If the down case still clears your hurdle rate, you have a deal. If only the base case does, you have a gamble.

Save this — run it every deal.