Due Diligence in Your Business Matters!
Due diligence is a very serious issue in your business and entrepreneurism journey. Without it, you are destined for failure for lack of planning and preparedness.
What is due diligence?
Due diligence is the phase or step in business where you request, review, and prepare your next phase of business. Due diligence helps you to uncover the hidden issues that may cause destruction later on. It helps you to move forward with your eyes wide open so you can position yourself for greatness.
Example of the Due Diligence:
Say for instance you were seeking to purchase an existing business. That existing business will already have it's own framework and existing foundations. As a potential new owner, you would want to ensure that you are indeed receiving what you're bargaining for. To ensure that you get a great bargain, you need to make sure that the existing business owner has properly run and documented their business dealings.
For instance you'll want to review the following:
tax payments and filings,
review accounting to determine if there are any open checks or outstanding invoices,
review insurance policies that are currently in place and determine if the policy carries over and whether it is sufficient,
ensure that all IP agreements and rights are in place,
and ensure that all standing contracts have been honored.
Steps to Take for Due Diligence:
Bring your own team to review the existing books of the company.
Review the previous offer to ensure it is aligned with the price sought.
Determine whether this is a deal you want to take. If not, walk away. There's no shame in it.
There's a bit more to due diligence. But regardless of whether you're creating start-up, purchasing a new business, or making a shift in yours, due diligence is a necessary stage.
This article is a service of SL DeBarros Law Firm, LLC. We offer a wide array of business legal services and can help you make the wisest business choices throughout life and in the event of your death. We also offer a Business Protection Start-Up Session or a Business Audit for an ongoing business, which includes a review of all the legal, financial, and tax systems you need for your business. Call us today to schedule.