How Do You Check Out Your Business Partners?

Question

This thread was started by a member here who was scammed by two other BP members. The discussion focused on a way to â€œoutâ€ these people and warn others by suggesting a â€œHall of Shameâ€ or ranking system for BP members you do business with.

Due diligence on your business partner is as important as due diligence on a deal.  Rather than hijack the thread, I thought Iâ€™d start another and ask how you protect yourself before you decide to do a deal with someone you donâ€™t know.  Iâ€™m not talking about the property or the neighborhood.  Iâ€™m talking about the person.

Account Closed · Answer

I agree that you can get a sense of a person through there involvement here.  I also suggest asking for some evidence of past deals similar to what you are looking to do or several professional referrals.

The nature of the partnership may dictate what you want to verify.  You may want to see bank or financial information.  You may want references.  You may want parcel numbers of properties rented.  You may want to verify the persons reputation in the community.

When you feel good about the potential partnership, I would formalize the partnership creating an organization or joint venture using agreements that specifically state how the business is to be run, how profits and losses are shared, how new partners are brought in, what happens when someone wants out, who makes the decisions, etc.  The more you formalize up front the less chance of confusion and animosity later.

Greg B. · Answer

I google anyone I consider doing business with.  I can also run criminal background checks on my state DPS site and check litigation on local county sites.

Account Closed · Answer

A good reputation on BP is a great start.  People that only post asking for money will probably end up with nothing.  On the other hand, some members here have developed a great reputation because they post to give information and answers, ask questions because they're genuinely interested in learning, and they create friendships and business relationships..these people are the first ones on BP I'd approach on the site when looking for a partner/money/contact, etc.

Bill Gulley · Answer

Good points Charles.

Unless the individual is known to you and well know in yoiur community I suggest you check them out.

What is your risk in partnering with someone else? You might think that if they are providing the funds in the deal and you are to do the labor, what harm could there be?

You could work for a month and end up getting the shaft! What is that worth to you?

You might consider spending a couple hundred dollars with a private investgator! A PI can provide personal information about someone that would take you more time than the money would be worth. They also have access to some records that may cost you to obatin.

You can pay more and obtain findings from interviews, assets, liabilities and opinions of potential risks in dealing with that person. Someone could have been investigated for fraud for example and never charged, they may find such information that is not of public record.

If your are really going to get into the business bed with someone you don't know or feel uneasy about, a PI might be a good solution for your due diligence. Not that you need to run personal investigations on everyone you consider doing business with, but when the circumsatnces warrant.

Account Closed · Answer

I've found that some people have good gut instincts while others do not.  I generally put a lot of trust in gut as well, but like to do some due diligence as well.

Jason Wheeler · Answer

I always use my gut... it is the best tool you have.  Trust it!

How Do You Check Out Your Business Partners?

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