Isn’t it amazing how – when your mind is open – ideas come to you. I was chatting to a new Linkedin connection – Nicky Thomas – on Tuesday this week and we were talking about franchises and business in general and we both agreed that not enough care is taken when hiring staff, finding outsourced suppliers to help your business or buying a franchise. Due Diligence – just 2 words that can make a mountain of difference to your business, if done correctly. If not done correctly, it can cost you thousands of pounds.
Due diligence is the investigation or the exercise of care that a reasonable business or person is normally expected to take before entering into an agreement. Most of us would use it when we are taking on a new member of staff. We can check that person out via social media, talk to previous employees or referees that the potential employee may have supplied details on. To take someone on as a new member of the team with no knowledge of this person would be classed as a risky decision and it could work out or could potentially cause untold damage to a business.
How many of you do Due Diligence when taking on a new supplier or a new outsourced business – like an HR consultant, IT consultant or business coach for example? How do we know those businesses are trustworthy, can add value to our business and are not there just to take our money and not supply the service we need?
I know so many businesses who meet someone at a networking event, like what that person says and “employ” them to help with their business – without checking them out, and then end up getting burnt financially or worse. We should always check out outsourced suppliers to our business with a great deal of care and attention. Do not rush into a decision and regret it later. It is better to take your time, check them out carefully, maybe have 2 or 3 meetings. They will understand and if they try and rush you into a decision, then do not go with them.
What about buying a franchise. So many franchises are purchased by people who get a sizeable redundancy, or who have been left money in an estate, and for them its the easy way to get into business. Now there are a lot of good franchises, but there are a lot more than aren’t worth the effort. I know so many people who bought a franchise and 6 months later have regretted it. They say if they had checked it out more thoroughly, they could have done it themselves without getting into ongoing monthly payment to a franchisor or just would not have gone ahead. Due diligence – so vitally important.
It is a lot easier for those of us who go networking as we have a large database of small business owners who can add value to our business. We can build relationships with them over a period of time, get to know them and speak to people who use them, and check them out before we make a decision. Let us also remember that probably a maximum of 5% of small businesses in the UK go networking, so 95 out of every 100 small business owners don’t know what we know and they don’t know who we know. We need to get the due diligence message out to those who don’t network so please spread the word with this article. The chances are we will know someone trustworthy we can connect them with and save them a lot of heartache.
I regularly speak to Business owners about checking the credentials of those they do business with. We are all looking for our Knight in shining armor but if we don’t take the due care and attention, we will end up with an imposter wrapped in tin foil.
This article was first published on LinkedIn by Richard Knight on 09/01/2021