That question is always not answered easily. It is just right that if you have doubts, ask others for feedback. However, it is not always best practice to ask others for immediate feedback. In starting a business, the community recommends performing due diligence on your own. Many will not be able to help much should you just see a supplier and then ask everyone for their feedback on the supplier. First and foremost, you will be the one to do business with the supplier. Second, other entrepreneurs will not help you if you do not put your own effort on it.
But first, What is Due Diligence?
According to Merriam Webster, Due Diligence is “research and analysis of a company or organization done in preparation for a business transaction”. This simply means when you are performing due diligence, you are making enough research and other humanly possible things to do to ensure yourself of the supplier’s credibility. After all, you will be trading money for goods / services. Proper research is an important rule for most startup businesses, and only be willing to trade if they pass your due diligence checklist.
In The Wholesale Forums, we give new members some tips in their due diligence checking. Oftentimes, we provide everyone a good headstart by simply performing web research about the company for the member. To give you an idea, here are some of the things we do in checking suppliers.
Check the Supplier’s Website
It is quite common for suppliers and wholesalers, big and small, to have their own website to present the products they have in store. What you should check first are their “about us” and “contact” pages. Check to see if they indicated their office address then do a cross search of it via Google. You should get a google map idea of the vicinity of the address, but also look out for other results of the address. If the address matches with say, multiple other companies, you might be looking at a virtual office. Tread carefully from there, as what you want is the real address of the company.
Check the Website’s Contact Options
A true supplier will always provide multiple options for customers to contact them, not just via email. Ensure that the website has the company’s landline phone number. Check if they are on Facebook, Twitter, or any other social network. It would be excellent too if they have Skype, whatsapp, or other chat apps. This means you have numerous options to contact them if anything goes wrong.
Check the Website’s Domain Information
Go to whois.domaintools.com and type in the website’s address in the provided field.
The important ones you should note are the Registrant details (name, type, address) and the date of registration. You should be able to get the name of the owner of the domain, cross check it again on Google, and other networks such as LinkedIn. It is highly likely you will get some important details of the domain with the domain owner alone. If the owner is visible on the web with no bad reviews, you’re in good shape.
As for the address, cross check it with the address indicated on the website. If they are the same, then it’s already showing good signs. Finally, check the Registration date. How long has the company been active? Is the website newly registered? A website registered for years gains more credibility, and newer ones still have to work on that level of trust.
Check for Business Registrations
As for the UK, it is important that companies are registered. You can have a good search about certain companies in Companies House. If you know the actual business name of the company, search it here. If the whois result shows a company name, use this website as well to search for the name. You should be able to see the company’s whole registration record from here, and whether they are still active or otherwise. An address is also visible here, which you could again check if they match their declared addresses. Should they all match, it means the company’s fully legal.
Important: If the addresses do not match, it does not necessarily mean they are not legitimate. Check the history of officers, see if the addresses change there. At times, companies move offices legally which would explain domain registration and business registration differences.
Check if the details are correct, including the nature of business and the status of the registration. Also check the persons involved in the company to know the active officers, and check through social or Google if you can find out something about them. The more you know about the company and the people behind them, the better.
Exchanging Emails? Make sure they are from the Company
There are some cases that someone will contact you via email and would say they are a representative of a certain company. As being your own business, it is important not to believe right away. Check the email domain used by the person. The domain should match the company itself and the person should not contact you through generic domains such as gmail or hotmail. The email should always be in this format: firstname.lastname@example.org / email@example.com . To double check, contact the company directly (through a support ticket or their support email) and ask them whether the person you are in contact with indeed works for the company itself.
Basic: Too Good to be True
A lot of supplier websites offer products that are too good, you will have to admit that you will gain better profits with them. It is always important to note that suppliers offering a very good price way below retail price, say 40% below, better to just steer clear from it. Most manufacturers, especially for branded goods, will not offer suppliers a deal so low that they will lose manufacturing costs. This only applies to brand new, authentic items of course. Others who say “original” and “brand new” with a price point way below 50% of retail, already have your doubts.
A worthy addition to this list, but a true good supplier will offer multiple forms of payment methods, and offer ones that provide a sort of buyer protection. Once you see Western Union, Moneygram, or any other form of 3rd party instant money remittance, then best to just move on and find another supplier.
Trust your Gut!
Did all of the checks and still not feel good about it? Then just say no. This is basically the simplest form of them all. No matter how many steps you have taken to make sure that the supplier is legitimate, but you still are not comfortable trading with them, trust your inner self and move away. There are always other suppliers out there that would give you ease of mind when dealing, you just have to look.
These are just a few steps on what we advise our community in performing basic due diligence. As a matter of fact, there are other ways for you to do them. You have to keep in mind that there is no such thing as a perfect research, just longer and longer research. It is always not enough to just do basic searching. Money is involved, and it is best that you do everything you could think of to make sure you, and your money, is safe in trading. If you believe you've done everything, you can always ask!
Original source - www.thewholesaleforums.co.uk