I just posted something similar to what I'm about to post here on another site.
I make my living administering contracts for a 2.2 billion dollar organization. Before I list a few things I want to be very very clear that I am in now way saying people bring this upon themselves, there are some fast talking scumbags out there. The top flim flamers seem to concentrate in the construction, automotive and computer software segments........I don't know why but that's what we encounter. What I'll list below applies to any project whether it's restoring your car or installing a new A/C unit in your house.
First, references references references, get three quotes at a minimum.
Next look them up and see if they've had any judgments against them. Talk to their suppliers, if the company is having cash flow issues you'll get an earful. Lots of companies experience cash flow issues and it doesn't automatically make them bad you just don't want to get caught up in the middle of it.
Do not, do not, do not pay up front. Make arrangements to pay as you go. If they need money for parts get receipts for said parts. Set up regular intervals to review/ get updated on progress and set up realistic time tables (your dented rusty Ferrari 250 can not be restored in 5 weeks nor can a guy install that new house A/C in an hour)
Get everything in writing, a real business person won't have a problem with doing this even if it just a basic work order, it protects both of you, if they have a real problem with this they're are not a business person and shouldn't be in business. Again it's not unreasonable to list a set of deliverables.
I routinely encounter educational consultants who are flabbergasted that I'm asking very a complete list of deliverables (many smaller school districts don't ask for this) I kindly explain that as a large organization we are heavily scrutinized and I need to be able to explain in a single sentence, how, why and where we spent our money. After that 99.9% get on board.
In the case of a car restoration one could easily say my wife wants to see the why and where of the money being spent or simply do like I do with various transactions in my personal life, I forewarn them that I'm a purchasing analyst and that I need certain things to be comfortable. For non purchasing people just tell them your anal.
Have a bail out plan, if they start to go off the rails pay them for actual expenses and get out. We have termination clauses at work, on personal deals I ask companies what happens if I turn out to be a total PIA and you don't want to deal with me anymore, how do we part ways satisfactorily?
Finally these are my red flags:
vague broad answers to specific questions.
To much marketing hype (a certain Italian chain restaurant comes to mind)
Bragging out of proportion to the organizations status (combined with name dropping)
One everyone should know but doesn't "hey this is a great deal, don't you want a great deal" type salesmenship read anything where someone is trying to treat you like you're not smart. They usually brush off your concern and change the subject. Run
Incrementally racheting up the bill with predictions of doom and gloom if you don't spend even more money. If you get this line and they can't concisely explain why it's not good to paint over those rusty floorboards, bail out.