Background checks are simple to perform, and they have become a staple in the business world. If you are considering a partnership in business, a background check is a necessity to make an informed decision about the partnership.
Every successful partnership depends on trust. Trust may seem counterintuitive to doing a background check, but in reality, a background check should only confirm information that has already been disclosed between you and your new partner.
Why you should perform a background check
- To confirm that your potential partner will be capable of contributing what they have agreed to provide.
- To protect your business from any pending civil, criminal, or corporate litigation against your potential partner.
- A background check will let you know if your potential future partner is over-extended financially, embroiled in a nasty divorce, or has abysmal credit. All of these things could directly affect your business.
- A background check will include tax records to make sure that your potential partner has no past or current issues with the IRS. Assets invested in your business could become a target for unsettled tax debts.
- What if your partner claims to have successfully operated a similar business in the past, but you find out they have never worked in the field? Or did they operate numerous similar companies and none were successful? This type of information is vital to making an informed decision before mixing business assets.
A background check might reveal things that your partner did not willfully hide from you, but are still relevant to your decision making about a partnership. Would you feel comfortable knowing your potential partner, who is married with three kids, is taking out a second mortgage on the family home to buy into your business? You might think that is a reasonable risk, or it might give you concern about their financial ability to stay the course through the ups and downs of starting a business.
A background check provides a pause button for making emotional decisions about a partnership. Of course, it is important that you like the person you are considering as a partner and it is great if you mesh well as friends. Those things, however, are not enough. You need to know that a potential partner has the resources and experience to see this venture through.
A simple background check can give you a chance to review the potential partnership venture with all the relevant facts. A background check can serve to prevent a disastrous partnership based solely on emotions. A background check might preserve a lifelong friendship by stopping a partnership that was unlikely to succeed.
On the flip side, a background check might be the catalyst you needed to commit to a partnership. When you see the experience and the financial status of your potential partner, it might help resolve any feelings that had you waivering about the wisdom of a partnership.
Remember, some of the most successful partnerships come from differences instead of being just alike in your views. Perhaps you are the entrepreneur and dreamer, but you have had difficulties in managing the day to day work of making your business a success. Your potential partner has a steady hand and is solely focused on profit and loss statements and making wise business choices. These differences can result in a wildly successful partnership where you each bring a vital piece of the puzzle.
Trust is vital in a partnership, so do not keep the background check a secret. Advise your future partner that you will be doing a background check and invite them to do the same. The more you both know about the other, the better your odds of success.
