Adept & Agile Due Diligence
How do we perform due diligence?
Due diligence is one of those terms that you may understand on the surface but don’t know how to put it into practice. Let’s learn about due diligence and how to use it in a real world setting, asa this is the way that we put it into practice on your behalf:
What is due diligence?
The dictionary definition says that due diligence is “the care that a reasonable person exercises to avoid harm to other persons or their property.” In plain English, due diligence means doing your homework. Before putting your business funds to work on anything, you should make yourself an expert. Often, due diligence is used to describe the investigation done before purchasing another company, so let’s start there.
Due Diligence for Hiring an Employee
- Ask for three references and personally verify at least two.
- For professional positions, verify that the person has the credentials they listed on their resume. Ask for copies of degrees, certifications, and experience. When checking references, verify that they worked in the capacity listed on their resume.
- Test their skills to assure they have core knowledge. Make a test on your own or check with your industry trade group about ready-made assessments.
- Psychological testing is important for high stress positions.
- Perform a background check.
- With the candidate’s permission, perform a credit check if the position involves access to financial accounts or other related position.
- Conduct an interview and ask another trusted person to conduct another.
The Hard Truth
Due diligence is time consuming, inconvenient, tedious, and sometimes expensive. It goes beyond the basic checks you would normally make and it’s safe to say that if you didn’t find it to be about as fun as going to the dentist, you probably didn’t do it right. You should know just as much about the business or person as you do about your own business.
Above, we’ve outlined a brief overview of some of the due diligence questions you might answer when performing these common business activities. For other decisions, produce a checklist of your own and make sure to include the needed experts. Even if you’re in a financial field, you aren’t necessarily skilled at evaluating a company’s books, for example. It’s better to spend a little money now to avoid costly mistakes later. And that is how we do it.