Effective Due Diligence Methods

Customers that do due diligence allow themselves to gain insight and information about a company or individual he or she is about to do business with in order to help the customer to evaluate potential risks the new relationship may pose. The types of due diligence a customer will do will vary depending on the potential business relationship to be had.

Ratings
The customer should learn the ratings the business has when dealing with customers, product resolution and look to verify any awards the business may claim it has. The first place to start looking is on the company website. For example, a business may claim it is part of the local chamber of commerce and rated with high quality. The customer should call the local chamber of commerce to verify the membership status and ratings of the business.

Licensing
Customers should verify the current licensing status of any business to make sure the business is legitimate. For example, if the individual is a Real Estate agent, verify the status of the agent by calling the agent's broker office and directly speak to the actual Real Estate Broker for that office. Each state offers a website where individuals can search for the licensing status of a business or independent contractor.

Financial
Financial reports can be verified for any publicly openly traded company with stock symbols. Current and past financial information can be found by seeking out published fiscal reports found on the company website usually under an "investors" section or link. These same reports can also be found in the "Reference" section of your local library.

Reviews
Once all of the above is complete, the customer should attempt to seek out the good, the bad and the ugly of the company in question. This can be done by soliciting feedback from friends, family members or associates who may have previously worked with them to learn about first hand experiences. Internet searches by using things such as "Company Name" and "Reviews" or "Experiences" may provide several positive and negative reviews to analyze. Finally, solicit information from the companies competitors. For example, calling a competitor and asking about pricing or product information may indicate a much higher or lower quality of knowledge or expertise provided by the company in question, depending on the results. You could even ask the competitor, "So, I've been shopping around and I've heard this from your company the 'that' from this other company. What's been your experiences with "company name"? And then let the representative talk. Finally, the customer should always check the businesses current ratings and reviews with the Better Business Bureau.

Better Business Bureau, Check Up on a Businesses, BBB.org