When you are planning on making a purchase for your business, even if it is a relatively small one, it is crucial to begin thinking about the future, while creating a long-term relationship with the vendor selected. However, prior to developing and nurturing this relationship, it is essential that you pay close attention to any potential red flags that may come up at the very start.
There is no question that it can be quite easy to become lost in all the excitement of choosing a new vendor, especially when they are going to be fulfilling important business needs. However, vendor due diligence in the beginning is crucial to help and prevent the possibility of a worst-case-scenario situation.
Some best practices for due diligence are found here so that you can make the most of your new vendor acquisition and prevent issues that arise when the wrong choice is made.
Online Reputation
Prior to selecting a vendor it is a good idea to look at various reputation sites, such as GlassDoor, Hoovers and LinkedIn. The vendor you are considering should have a well-developed profile page on LinkedIn, as well as full employee information. If possible, get first-hand information from an employee.
Also, reference websites including Hoovers, offer unbiased reviews from customers and you can seek a paid report to acquire more specific information about the company.
Strong Management Team
The management team of the company also needs to be easily accessed online, and it should be documented on LinkedIn. Try to search for executives who have over 500 connections on their page. This lends to the credibility of the company and is extremely difficult to fake.
The Investor Team
Try to find out if the vendor is a member of any institutional investor groups. An investor will add company credibility and legitimacy to the venture that you are contemplating.
A Real, Physical Address
How do you know if the company really does exist? If they have a real physical address, then the answer is yes, they do. Also, check to see if they are listed on Google Maps. If they do not have an address listed on the company’s corporate page, than there is a good chance that the company is trying to hide something. At this point, it may be a good idea to reconsider the offer that they have made.
Completing Vendor Due Diligence can be challenging and difficult; however, with the help of the Compliance Education Institute, the process can be made easy. Visit their website to learn more about the services they offer.
