Vetting Business Opportunities – A Review of the State of the Art
Being a risk-taker is one thing. But jumping head first and betting big on a business opportunity without first doing your research is financial suicide.
It doesn’t matter how much money you have burning a hole in your pocket that’s just begging to be invested; smart business means doing your due diligence. It involves weighing the pros and cons, crossing your t’s and dotting your I’s, and doing all the necessary homework that helps you create the most comprehensive picture of the endeavor you’re about to sign your name to.
Vetting isn’t just a process; it’s an art. It’s asking the right questions, knowing where to look, and scrutinizing over the details. And it starts with not immediately falling for every passionate pitch that’s thrown in your direction. If you want to refine your approach and gain insight into crucial details that will tip your financial decision in the direction that benefits you most, then you have to master the art of vetting.
Evaluate what you know and what you don’t.
Don’t rely on information that has trickled down through the grapevine. People who aren’t sensible enough to ask the right questions or immediately accept assumptions as truth are the bread and butter of scammers. They prey on those who will believe anything as long as it’s attached to a credible source, regardless of the fact that they didn’t hear it come straight from their lips.
Get the whole story.
Never assume. Ask yourself what is missing from the narrative. Once you’ve recognized what you don’t know, take steps to get the answers that fill the gaps. Offers that are too good to be true will often have holes in their plots.
To find the truth, you may have to go beyond your immediate circle. Ask other people you know in the industry. And if the opportunity is something that ventures into unknown territory, ask people from that niche what they know or have heard. Take all this information with a grain of salt unless, of course, you’re talking to a respected leader who can present you with all the facts, complete with numbers, charts, and graphs.
Validate, validate, validate
Be meticulous. Research online. Make phone calls. Meet other people involved. Use what resources you have to run background checks.
Failure to ensure whether the information you’ve gathered is legit or not can spell your doom. Asking people who seem to be at the right place and the right time doesn’t mean that what they’ve fed you is accurate. Due diligence demands that you go back out there and make sure everything you’ve heard is valid.
Vetting shouldn’t just be reserved for business schemes that smell fishy but apply to all business-related prospects. After all, you can never be too careful. And by religiously enforcing your vetting process, people will come to know you as someone who refuses to be taken advantage of.
With swindlers becoming increasingly sophisticated and clever operations who use the most unassuming characters to play big roles in carrying out scams, it pays to be paranoid.
The fact that seemingly sophisticated investors would give Madoff hundreds of millions of dollars after he refused to allow them to conduct ordinary due diligence was a tribute to either greed or stupidity.