As a startup or new business, a surefire way to help you gain traction and market influence is by partnering with other established organizations. Whether you are looking for a supplier or manufacturer for your products or a marketing firm for brand promotion, there are a variety of businesses that are ready to help startups get off the ground.
How do you know if the business you are partnering with is reliable? The last thing you want to face as an entrepreneur is the loss of revenue or damage to your brand from a partnership that goes south or never delivers. To help protect yourself and others in your startup, you should always order a business background report before going into business with any business. A background check will help you mitigate the risks that can potentially arise if a company is facing legal issues such as liens, bankruptcy, or judgments - issues that can quickly become a problem for you should you go into business together.
What is a Business Background Report?
You are likely familiar with background checks completed on individuals - a factual, data-driven report can unveil red flags or past issues that may sway a decision. However, have you ever considered that businesses and organizations themselves can be the subject of a background report?
A business background and reference report allows individuals and other businesses to learn more about a business as a whole. From financial information, past business dealings, and ethical issues, there is much to be gained from a business background report. Specific information such as business credit history and payment history, as well as any public records or legal issues that the company has faced can help you make an informed decision on a partnership that may or may not help your business thrive.
This process isn’t only done for B2B partnerships or supplier contracts. Employees and business owners can even run reports on their own businesses to determine if there are any issues they should be aware of behind the scenes.
Business background checks can be ordered and run through background check companies in the same manner as individual background checks. The company will run a full review on the business and deliver a report based on the information being sought.
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What Information Is Included In A Company Background Report?
Once a company background or reference report is run, you will receive a report full of helpful information that can help shine a light on a business's practices and operations. Here are six common pieces of information you can gather from business background checks:
1. Basic Company Background
A basic business background report will give you an overview of the full business history, background, and information related to current ownership. This can also include the various owners, operators, and executives that are involved with the company, and any red flags related to those individuals. You can also gain a quick snapshot of the company’s status in the industry, and whether or not the company’s dealings are reputable.
2. Company Financial Background
An incredibly important piece of information to be found in the background check will be the economic and financial information of the business. This can include, revenue, income, assets, liabilities, and any negative financial burdens the company bears.
3. Business Credit Background
Similar to a consumer credit report, a full business background check will also include a credit report on the business itself, showing how well the company has kept up with loans, payments, and any outstanding debt the business holds.
4. Company Legal and Public Filings Background
It can be helpful to gain insight into any legal or public judgments, liens, or bankruptcies that the business has encountered in the past. This will help you avoid discovering costly problems once contracts have been signed.
5. Corporate and Professional Licensing & Certifications
On a more positive note, the background report will also help you consider the various licenses and certifications that the business holds.
6. Reputation Background
Finally, and perhaps most importantly, a full business reference report will give you a window into any complaints or reviews that the company has filed with organizations such as the Chamber of Commerce and the BBB.
How Much Does A Business Background Check Cost?
With the vital information that can be garnered through a business background check, the resource's benefits far outweigh the cost of completing the review. Pricing for business background reports varies depending on the company's size being reported on and the company you use to complete the report.
Typically, business background and reference reports will fall into one of three levels:
- Personal Consumer Protection Checks
- Larger Personal Protection and B2B Checks
- Enterprise-Level Reports
As you can imagine, the larger the organization and report, the costlier the process will become. However, small-size consumer protection checks can range from $50-$100 per check. For larger, full-scale business checks, the price may vary by company. Do your research to find a background check company that will work in your budget and unique needs.
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Don't Leave Risk Up To Chance
If you are building a partnership or going into business with a supplier, you need to protect yourself from the unknown. Completing a business background check is one way you can help ensure that your startup avoids painful mistakes and misfortune.
When it comes to protection, avoiding a business background report may end up costing you far more than the price to order a check. Before you go into partnership with any other business or organization, protect yourself and your team by completing a high-quality business background check.