Does Your Company Know Its Business Partner
Do you know the companies you do business with? Here’s why it’s important...
There are multiple reasons why you should research the companies you do business with but how do you get started?
If it’s a task assigned to you what information should you collect?
While finding the information isn’t difficult, shifting through the data can be challenging.
How do you know which information is pertinent and what can be ignored?
We’ll take a look at why you should perform a business background check and what information to include.
When You Should Research a Business
A common reason organizations perform a business background check is when the companies are planning on entering a partnership. It can be particularly important for potential overseas partnerships.
Other reasons include a potential merger or acquisition of a company. Franchising often involves researching potential partners. It can also apply to vendors and suppliers.
Doing your homework protects your business. For example, a company may be involved in illegal activities such as money laundering and it’s not something you want your organization associated with.
Researching the company can also highlight any pending lawsuits and other types of litigation that may negatively affect your business and brand.
How to Research a Company
Sending a questionnaire to a business doesn’t guarantee you will receive honest or accurate answers.
It’s always best to hire a professional to perform the business license check.
The research does come at a price, but the expense is worth the time and effort you save. Your staff can concentrate on their tasks instead of spending hours sifting through data.
Background research typically starts with searching through public records. Online databases typically provide the necessary information, often free of charge.
Government websites can be another source of information. However, the amount of information available may be limited by the business’s industry.
Not all industries are government-regulated, so you may want to consider spending money on a general business report.
Even though you are paying a small fee, the report contains information on the company’s structure and operations. Financial information is also included.
The downside to purchasing this type of report is the company is often responsible for submitting the information. The data may not always be correct.
Run a Credit and Licensing Check
Something you don’t want to forget is running a credit check.
Checking a business’s credit rating is similar to researching an individual’s credit score.
The credit check gives you a good idea of the business’s financial health.
You do not want to enter into a partnership with a business holding a large amount of debt.
The credit rating can also affect interest rates, something to consider if you and your potential partner are planning on expanding the existing business.
A business license check is something else you don’t want to forget.
It indicates the business is legitimate and follows industry compliance standards.
Whether you are taking on a new client or entering into a partnership with another business, it always pays to do your homework. It’s the best way to protect your company and enjoy a profitable partnership.