Background Screening a Business
Background screening is primarily thought of as a tool to vet a person’s character. A business is an entity created to represent and also protect the individuals behind it.
The scope of a business background check is determined by the level of risk. Below, we outline three common needs for business background checks and suggested screening packages.
Level One:
Personal Consumer Protection
A basic business background check doesn’t have to cost an arm and a leg. A “level one” business background check can be performed in the area of $50. If you’ve ever had the misfortune of dealing with a company that you paid money to up front and never received a service, or had to repair a situation caused by bad service, the fee for a basic business background check will feel like the best money you’ve ever spent. As an example, a level one background check best corresponds to the following needs. You’re in the market to…
- Hire a contractor.
- Utilize a dog walking service.
- Retain a babysitter or nanny through a service.
- Take your car to a mechanic.
A “Level One” screening package would generally answer the following questions.
- Have they been in business for a significant amount of time to have “expertise”?
- Are they operating under a fictitious or DBA (doing business as)name
- Are they incorporated or registered with the state?
- A “Doing Business As” another name?
- Are there unresolved complaints filed against them with the Better Business Bureau?
- Have their past clients filed lawsuits against them for breach of contract or any other reasons?
- Do they utilize criminal background checks on their own employees?
Level Two:
Large Personal or Business to Business Transaction
Maybe it’s property, machinery, equipment, vehicles, or even a timeshare. Whatever the case, you (or your company) will be entrusting this business with a large sum of money. A “Level Two” business background check would include the basic research of a “Level One” screening package and also go a few steps further. For example, we would seek to answer the following questions for our “Level Two” business background check:
- Are they Incorporated or registered with the state?
- Are they licensed and or Insured?
- Have they been in business for a significant amount of time to have “expertise”?
- Are they a DBA “Doing Business As” another name?
- Possible additional searches on DBA’s discovered
- Are there unresolved complaints filed against them with the Better Business Bureau?
- Have their past clients filed lawsuits against them for breach of contract or other reasons?
- Who are the principals of the company?
- Have the principals of the company filed for bankruptcy multiple times?
- Does the owner or principal have litigation against them from prior clients?
- Does pending litigation, tax liens, or other civil actions put the owner/principal in a financially difficult situation? (You don’t want your money going to pay off other debts instead of paying for materials, labor, etc.)
Level Three:
Business to Business Venture
Once your company joins forces with another company for a project, marketing campaign or other venture, their skeletons can potentially become yours. Their reputation can be reflected on you, and sometimes, their legal problems can become your legal problems. A business-to-business venture is too significant not to invest in a thorough business background check. Once again, building on key parts of the “Level One” and “Level Two” business background checks, important research would include…
- Are they incorporated or registered with the state?
- Are they licensed and or Insured, and to what degree?
- Have they been in business for a significant amount of time to have “expertise”?
- Are they a DBA “Doing Business As” another name? (Possible additional searches on DBA’s discovered)
- Are there unresolved complaints filed against them with the Better Business Bureau?
- Have their past clients or business partners filed lawsuits against them for breach of contract or other reasons?
- Who are the principals of the company?
- Have the principals of the company filed for bankruptcy multiple times?
- Does the owner or principal have litigation against them from prior clients?
- Does pending litigation or tax liens, suits, or other judgments put the owner/principal in a financially difficult situation? (You don’t want your money going to pay off other debts instead of paying for materials, labor, services etc.)
- Are the owners or principals involved with other corporations that would pose a conflict of interest?
- Is this company as prosperous as claimed? (It’s not difficult or terribly expensive to make a professional looking website. What’s behind the website is what really matters.)
- How long has the website existed?
- How much traffic does their site receive?
- Who links to them?
- How much are they spending to market their website or product online?
- What’s the reputation of the business online?
- Who’s talking about them and what’s being said?
- If no “buzz” is out there, why not?