Prospective business partnerships and other opportunities are everywhere, but it can be difficult to sort the good ones from the lousy ones. Mike Michalowicz, the founder of Profit First Professionals (profitfirstprofessionals.com), an international network of accountants, bookkeepers and financial experts, offers these four signs for entrepreneurs and business leaders that signal a seemingly golden business opportunity is really a black hole.
1. History repeats itself. Past behavior is the single best predictor of future behavior. When someone presents you with a new business opportunity, do your homework, and look into the reputation of the person you’re considering working with. Ask for references. Understand that any business will pick their best clients, who are most likely to say positive things, so it’s best to specify the references you want. Michalowicz suggests asking for a reference from their oldest client (for performance over time), their newest client (for recent first impressions), then let them choose the last reference. “If you specify which references you want to see, you’ll get the real scoop and learn how your opportunity is likely to pan out.”
2. There’s a lot of big talk but little action. Making promises costs nothing, but delivering on those promises is a whole different ball game. Build small milestones of success into your deals, making each marker or evaluation point a fail-safe – an opt-out point. You mitigate your risk by requiring progress, and you’re also minimizing the possibility of being sweet-talked into continuing with a partnership that isn’t working for you.
3. Desperate people do desperate things. Be aware of the times when you’re in a weak position and be prepared to take measures to mitigate your losses. If possible, get your business into a solid, profitable position before you take on new partnerships or cooperative ventures. At the very least, you need to be conscious of where you stand and be aware of your weaknesses.
4. You don’t have the same goals as your potential partner. You must be willing to walk the same path toward the same goal if you want the opportunity to pan out. Failing to discuss your goals upfront means you’re losing out on the benefit of combined, cooperative effort, but what’s worse is that you could even end up working at cross purposes.
