How Do You Check Out Your Business Partners?

[Jeff S.]

This thread was started by a member here who was scammed by two other BP members. The discussion focused on a way to “out†these people and warn others by suggesting a “Hall of Shame†or ranking system for BP members you do business with.

Due diligence on your business partner is as important as due diligence on a deal. Rather than hijack the thread, I thought I’d start another and ask how you protect yourself before you decide to do a deal with someone you don’t know. I’m not talking about the property or the neighborhood. I’m talking about the person.

[Account Closed]

I agree that you can get a sense of a person through there involvement here. I also suggest asking for some evidence of past deals similar to what you are looking to do or several professional referrals.

The nature of the partnership may dictate what you want to verify. You may want to see bank or financial information. You may want references. You may want parcel numbers of properties rented. You may want to verify the persons reputation in the community.

When you feel good about the potential partnership, I would formalize the partnership creating an organization or joint venture using agreements that specifically state how the business is to be run, how profits and losses are shared, how new partners are brought in, what happens when someone wants out, who makes the decisions, etc. The more you formalize up front the less chance of confusion and animosity later.