There are plenty of factors to consider when starting a new business. Is it viable? Are you knowledgeable enough? Can you launch it on your own? If you can’t do everything alone, you’ll need a business partner.
Taking on a business partner is serious. A business partner should be trustworthy, but you can’t know everything about someone right away. Certain aspects of their personality are revealed only through interactions over time. Until then, you have to trust your instincts and make common-sense decisions.
One common-sense decision is running a background and credit check on all new business partners and insisting they do the same for you.
1. Transparency is fundamental to trust
It’s important to begin every new business relationship with transparency. By insisting you both perform background and credit checks, you’re laying the groundwork for that transparency. Your willingness to lay everything on the table shows your potential business partner you’re committed to the relationship and the business’s success.
If a person isn’t willing to be checked out, they’re not going to make a good business partner. People who have nothing to hide often get offended at the suggestion of being checked out. You don’t want to do business with a person who feels offended by request for transparency. People who become personally offended by requests for transparency generally turn out to be unreliable and are likely to be offended when you hold them to account for broken promises. It’s not a good situation.
There are three ways to verify the integrity of your new partners: research them online, run a credit check, and run a background check.
2. You need a variety of information
Your new business partner might be serious about running the business, but are they sincere? It’s hard to tell. In the beginning, don’t feel bad about researching and investigating your new partner to the fullest extent possible. You don’t know if you can trust what they say, especially if they do a lot of “name dropping.” Do they really live in the neighbourhood they claim to live in? Do they really meet with well-known names in the industry? It’s not hard to find out.
Although they’ve been dubbed “spy apps,” there are apps that allow you to track a phone number using GPS coordinates up to 50 feet. These apps are useful in business partnerships where people do a lot of independent travelling. For instance, say you’re a film producer, and your new business partner tells you they got invited to the Cannes Film Festival in France. You can’t attend because you have young kids to take care of, so you tell your partner to do their best to get the company some leads.
How do you know they’re actually attending the festival and not just flying to Cannes for fun on your company’s dime? You can’t verify they purchased a festival ticket because they were supposedly invited for free. The only way to know if they attend the festival is to track their phone via GPS.
3. A credit check tells you if your business has a future
Levi King from Inc.com explains that running a credit check before solidifying a partnership will tell you whether or not your business has a future. For instance, at some point, you’ll need to take out a loan. In an equal partnership, you and your business partner will need to be on the loan application. If your partner has poor personal credit, you’ll probably be turned down for the loan. If you can’t get funding, you’ll have difficulty launching your business beyond an idea.
4. You’ll know if your partner committed fraud with other businesses
A background check won’t tell you everything, but if your new partner is a serial con artist who’s been caught in the middle of some schemes, it will pop up on their record. Sure, some people might be innocent, but do you really want to take that chance?
Play with A-Players for success
Launch your business with someone who has visible integrity. If a potential business partner got mixed up in a bad situation that shows up on their background or credit check, it doesn’t mean you should definitely cut them off, but be extremely cautious. Be selective with your business partners. Go for the A-players from the start for the best possible results. It’s your success and financial future at stake.