Due diligence may be key to your business' recovery

As that speck of light looks more like the beginning of the end of the recession and less like another freight train, decisions you make now may determine how much your business participates in any recovery.

Situation 1. You landed a new customer whose business, you're certain, will lead you out of the recession. But: When you've produced and shipped the widgets your new best customer has ordered, will your invoice be paid?

How do you know? Did your due diligence include something beyond a Dun & Bradstreet report that Joel Goldberg says "is just a reflection of what the business owner tells them?"

Situation 2. Yours is a just-in-time manufacturing business, with parts arriving in time to be assembled and shipped. But: The supplier that was so reliable before the downturn seems to have gone out of business.

As we gear our businesses back up, maybe we should do some due diligence - not only on new customers but on old suppliers. The recession has hurt many businesses. How much they've been hurt is the question.

The situations above were suggested by Goldberg, who is president of Aurico Reports, Inc., an Arlington Heights company whose services range from background investigations on prospective employees to fact finding on businesses large and small.

Goldberg has an obvious stake in scenarios where a lack of information could bite an otherwise innocent business. The issues he raises, however, deserve consideration:

• Do you really know whether your new customer is good for the payment? Is litigation, perhaps involving unpaid bills, pending against the company? Does the company tend to sue, perhaps claiming provider quality issues?

• Have you been talking to your vendors, so you can assess their ability to perform for you now as they did in the past?

• Do previous customers have the ability to buy - and pay - again?

The point is that you should know. The recovery from the recession is likely to be slow enough; you don't want undelivered supplies or unpaid invoices to bog down your comeback even more.

Here's another due diligence project Goldberg suggests: Is that new manager - let go by one of the big guys in a cost-cutting move, but seemingly having the skills to help lead your business to better times, everything she seems to be?

"One of every five adults has a criminal record," Goldberg says. "One third of resumes contain an out-and-out lie, and seven of 10 stretch the truth."

Pre-employment background checks may be a good idea.

The good news is that business owners can do much of the due diligence themselves. The bad news is that few do - which is why Aurico and similar firms exist. Good searches take time.

• Questions, comments to Jim Kendall, JKendall@121MarketingResources.com. © 2009 121 Marketing Resources, Inc.