For many companies, referrals are the core of the business. Whenever an existing partner introduces you to a vendor that can solve your business problem, there is an implicit trust that they’ll be okay for you, too. But that’s a risky assumption: how your trusted partners do business with them might not align as well with you.
Why do partnerships fail?
According to Mark Sochan’s book “The Art of Strategic Partnering: Dancing with Elephants,” 60-65% of all strategic partnerships fail. The most common reasons include unrealistic expectations, failure to agree on objectives, and lack of trust. This is why conducting background checks on potential partners and stakeholders before entering a new business engagement is a critical business practice.
Why should we vet a potential partner?
Here are ten compelling reasons for vetting a potential partner or stakeholder before venturing into a business together:
- Risk Mitigation: Background checks help mitigate risks associated with fraudulent activities, financial instability, legal issues, or reputational damage. They provide insights into the integrity and reliability of the individuals or entities involved.
- Protecting Company Assets: Screening potential partners safeguards your company’s assets, including intellectual property, financial resources, and sensitive information, reducing the likelihood of theft, fraud, or misuse.
- Enhanced Decision-Making: Thorough background checks provide comprehensive information that aids in making informed decisions. Understanding a partner’s history, reputation, and financial standing helps choose the right collaborators for successful and sustainable partnerships.
- Maintaining Brand Reputation: Engaging with partners or stakeholders with dubious backgrounds can tarnish your brand’s reputation. Background checks help maintain your company’s integrity and credibility by associating with trustworthy entities.
- Compliance and Legal Requirements: In many industries, compliance with regulations regarding due diligence and vetting of partners is mandatory. Background checks ensure adherence to legal requirements and prevent potential legal liabilities.
- Avoiding Financial Pitfalls: Assessing the financial stability of potential partners can prevent financial entanglements, such as partnering with entities in financial distress, which might lead to financial losses or contractual disputes.
- Building Trust and Confidence: Demonstrating a commitment to due diligence by conducting background checks fosters trust among stakeholders, clients, and investors. It signals a commitment to transparency and accountability
- Conflict Prevention: Understanding the history, associations, and potential conflicts of interest of partners helps anticipate and prevent conflicts that could arise during collaborations.
- Negotiation Leverage: Knowledge gained from background checks provides leverage in negotiations, allowing for better terms, agreements, or adjustments to mitigate identified risks.
- Peace of Mind: Ultimately, conducting thorough background checks provides peace of mind, ensuring that you enter into partnerships and collaborations with a clearer understanding of the parties involved.
You work hard to maintain the integrity of your business and stand out: vetting potential collaborators, third-party vendors, or clients will reduce unpleasant surprises and ensure a secure and reliable working environment for all the parties involved.
How we can help
At Negative PID, we offer Intelligence Services that empower you to conduct your vetting process independently and with total confidentiality. You can also choose to utilize our investigative resources for added support.
Explore our intelligence services and take control of your business operations with peace of mind!
