Not all that glitters is gold, but sometimes if you want your business to grow you have to take risks, even if the glitter turns out to be coal. HOWEVER never risk who you do business with! It isn’t worth it. All it takes is one bad business partner or one bad supplier to tarnish your brand or disrupt your product/service/idea. This is why I advise my clients to always verify (investigate and confirm) the entities they contract with. When a company/person says they are something or they are someone NEVER take their word for it, always check them out yourself. Business is about money and money attracts all sorts of wannabe Warren Buffets with an abundance of international debt stowed away in their closets…behind the skeletons. Here are some simple checks that you can do for free/cheaply, to confirm the credentials of those you are in business with:
- Check their details on Companies House (or your country’s equivalent)- Companies House is a database of all companies and LLPs incorporated in the UK, type in the company name or company number and you get a whole load of information for free just like that. You can see their previous company names, their registered office address, their directors’ details, whether the business is still active, when their accounts were filed (or due) and a history of its filed documents. For a few pounds you can even obtain their latest filed accounts and judge their progress for yourself!
- Search for disqualified directors – You can do this on the Companies House register or on the Insolvency Service register (look up your country’s equivalent), these registers will tell you if a director of a company has been banned or disqualified from being a director (if the name pops up REPORT them, they tried to play you).
- Check the bankruptcy and insolvency register to see if an INDIVIDUAL is bankrupt OR the register of insolvent companies to see if a company is insolvent (bust).
- Check their website – Does it look comprehensive? Are there any TESTIMONIALS from their clients? Does it show who is behind the business? What is their mission statement? Where are they based? Do they provide contact details?
- Go with your gut – Finally, what does your gut feeling tell you about the company/person? If you have any suspicions or you are uncomfortable dealing with the company/person, walk away and take your business elsewhere.
In the legal profession we call the above DUE DILIGENCE and it is a process we undergo to verify OUR OWN clients (although there are further, more thorough requirements, such as passport copies and knowing who the shareholders are etc). It is a good habit to get into. Even better, keep a record that you checked these companies/people out – if your business blows up and your lender requires an audit before increasing your loan, you will thank yourself that you kept some evidence of your good business practice.
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