Due diligence, or the process of learning more about a potential vendor, is often low on the priority list with most businesses. Oftentimes, businesses schedule a meeting with a potential vendor, look at everything the vendor has to offer, get a feel for the company during their meeting, and decide right then and there whether they want to work with the vendor or not. This is not how it should go! Ideally, due diligence is done well before booking a demo. While doing some research on a vendor by visiting their website is important, due diligence is far more than that.
Due diligence is a crucial part of saving a business from losing money, resources and even damaging its reputation. A business should take care to do some homework and really see who they’re getting involved with when they consider signing on with a new vendor.
Yet many businesses don’t know when to conduct due diligence on a vendor. Should it be before meeting with an account manager? After the demo? What if they’ve already been signed on to work with the company?
The answer is: it’s never the wrong time to conduct due diligence! It’s never too late for a company to do its research on a vendor. The only mistake a company can make is by not doing its due diligence at all.
Option 1: Before a Demo
The ideal time to conduct due diligence on a company is before the wheels have even been put in motion. Doing some research on a vendor that your business is considering is a great way to weed out unreliable vendors from solid contenders.
Some ways that a business can do this is by visiting business review sites. Sites like G2, Yelp, and the BBB are all ways that a business can conduct free research on a vendor, all before anything has been solidified. By doing due diligence this early, a company can avoid wasting its time canceling demos or bringing up concerns with its future account manager. A company can simply cut its ties before anything has been done and look for a better vendor to work with.
Option 2: After the Demo
Some companies may want to do due diligence after having a demo with the vendor, much like conducting a background check on a potential employee. This is also a viable option for businesses, all without having to risk too much.
As mentioned before, a business can do simple due diligence by researching the vendor online. Using reputable, third-party review sites is the best place to start; using the vendor’s own customer reviews on their website is sure to be biased and unworthy of trust. Balanced, unbiased reviews written by real clients of the vendors – or even former employees – are much better ways to gauge a vendor’s trustworthiness and reliability.
Should a company decide that they don’t want a working relationship with a vendor they’ve met with, a simple email is all that’s needed to end things before they’ve begun.
Option 3: After the Contact Has Begun
Some businesses may not have done their due diligence on vendors and may have already signed on with them. Some may even have worked with a vendor for months or even years before they begin doing due diligence. Although this isn’t ideal, it’s still never too late to do a bit of research. Simply because the contracts have already been signed, doesn’t mean that a business should have blind faith in a vendor!
Much like in the sections above, a business can start its due diligence by looking up honest reviews of the vendor’s practices and customer service. For vendors that have been with the business for a while, finding older reviews from before the company began working with the vendor is something to consider. By seeing how the vendor acted with previous clients, a business can get a strong idea of how the vendor may act in the future. Did the vendor hike up contract prices for all clients who stayed with them for two years or more? Did the vendor send inexperienced employees to deal with long-term clients? How a business has acted in its past toward long-term customers is a great way to see what may lay ahead for your own business.
How Can Software Help?
In addition to conducting online research, a company can also do its due diligence by using risk management or vendor due diligence software. These programs can do extremely thorough research on a vendor with the click of a button. Not only does this cut down on the amount of time that must be spent doing due diligence; it also saves the company money and manpower that may be better spent on other tasks.
Risk management software can also help a company with conducting other forms of risk management, such as finding cybersecurity vulnerabilities and financial risks that could threaten the company down the line, among others.
These programs are also useful in vetting future vendors as well. This means that businesses can use these programs to automate due diligence on vendors that haven’t even signed on with the business. This can save additional time and money while minimizing the potential risks that a business might face. This, overall, makes risk management software a great investment for businesses who want to be thorough with their due diligence, while also reducing the number of other risks that face the company.
All in all, due diligence is hugely important, yet rarely discussed aspect of running a business. With such a large role that vendors play in the growth of a business, more businesses should take care to research who they’re working with. Doing so could save the company valuable time and money that can be better used elsewhere. In addition, using risk management software can make the process far more efficient, and give the company access to a number of additional tools. Due diligence is not something a company should overlook, even if they’re familiar with the vendor or have already signed on with them. It’s never too late to be cautious!
