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November 16, 2019 at 1:46 am #999880Calcul8orParticipant
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Would really like your opinion on what precautions you’d take if you were offered the chance to form a partnership with an interstate business you’ve never met, but know of, or done some work for in the past?
If an opportunity arose to team up with a business where each of you were contributing your specific expertise and skills, with the view of establishing a long term venture, what would you investigate as part of your due diligence, and where would you go to get that information? How would you be satisfied that your investigation is sufficient?
ShailNovember 17, 2019 at 11:12 am #1221737Dave – FS ConciergeModerator
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A little hard to answer because it depends on what you’re doing together, and what leaps of faith you’re having to make.
Aside from doing research on them, I think there are dozens of cues to be picked up from your past/current interactions with them.
-How do they communicate
-How quickly do they pay your invoices
-How do they deal with a problem/dispute/grey area
-How do they treat their customers/employees
-How reasonable are they with their demands / deadlines
-Will they put relationships before dollars
Lots of small actions reveal the values of a company. If you don’t have enough data, doing a small project with them may be a good idea so you can gather that extra info (e.g. see how promptly they pay, or how they give feedback, or solve a small problem).
I’m sure there are many other approaches, but this is a way to use your personal dealings to build up a picture over time.
DaveNovember 18, 2019 at 10:57 am #1221738bb1Participant
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Not knowing the business, my suggestion may not be relevant, but with one business I was looking at setting up an arrangement with, I had a mystery shopper (my sister), ring them and get them to provide some of their services to them. The idea being to see how there customer facing services were handled, and level of professionalism and she was instructed (by me) to push the boundaries of what she wanted, ask a million questions, etc, etc.
I have also done a similar thing for another person who was looking at partnering, you get a different insight to the business, if you come from a customer point of view, then from a potential partner.
Also ask for profit and loss and all the normal due diligence you would do if you were purchasing the business, becoming a partner you are putting your business at risk if they are borderline.
Ask for references, I know I always say that references are useless, as I wouldn’t give you the name of someone who I have stuffed up with, but it may give some leads, but then I always ask to pick one or 2 random customers not offered by them and see what the response is.
If they say no, what are they hidingNovember 18, 2019 at 3:23 pm #1221739Paul – FS ConciergeModerator
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Pure due diligence is a little difficult unless you are both willing to offer an extreme level of transparency to each other eg, show bank accounts, ring customers etc.
All that said, if you both see merit in partnering, could you do a staged process similar to what Dave has said, initially with little capital or branding at risk, and then gradually deepening same when you are each satisfied that it is a good fit.
I have found that values more than anything else need to be in alignment with partnerships because when the chips are down and difficult decisions need to be made, you values will often determine what way you want to head. And values kind of form part of of your “essential being” so it hurts a lot if they are challenged or if you are not able to operate through that prism.
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