A company check is an important tool for business due diligence and should be carried out before any major interaction with another company. But company checks can also help you spot business opportunities and provide you with the information you need to negotiate the best deals for new business.
Websites, face-to-face meetings and interviews can tell you a lot about a company. But conducting a company check can be just as revealing – showing you everything from a company’s financial performance and structure to the history of its directors. When carrying out a company check, the combination of company accounts, annual returns and annual reports will provide a critical view of the company’s health to help inform your decision whether to do business.
Company checks can also be used in other ways. With some committed research, the wealth of information available could help you spot vital trends in a company’s performance and highlight opportunities for investment or collaboration that aren’t immediately obvious.
Opportunistic enterprises analyse other companies’ performance as a key method of finding new business opportunities. After all, knowing your market and spotting better-than-average performance is a wise investment approach. A little research could go a long way.
This is particularly true for those who use account-based marketing. Also known as key account marketing, this is a strategic approach to understanding key current or future clients in order to offer them a more profitable service. The aim is to conduct in-depth research and develop thorough knowledge of how these client works in order to create targeted marketing packages that meet their needs. This approach is heavily data and analysis-driven. Therefore, companies using this technique are in a strong positioned to make the most company checks.
If, for example, a company reports higher-than-usual annual revenue or demonstrates an upward trajectory in its profitability, this could be a good opportunity to look for collaborative business prospects. By adopting an account-based marketing approach, businesses can then contact the company with more attractive credit terms, incentives or returns than competitors.
While business operations vary substantially between each company and every enterprise’s objectives are unique, when it comes to investing there are underlying principles that are important across the board. Identifying the following positive trends in a company’s performance could herald a positive investment opportunity:
Take a look at how the company’s financial performance has fared over the last few years, looking for changes and finding their cause. For example, did improved or decreased performance stem from an identifiable event? How will this event continue to affect the company?
Has there been a change to the company’s structure in recent years, for example through a merger or streamlining exercise? Research how this impacted its finances and whether improved performance is just a temporary result of reduced operational costs and increased cash flow, or if this is a permanent development.
First identify your own risk framework and appetite, and then look at the company’s. Has there been an improvement in their risk profile or credit rating? Has this followed a positive upward trend or is it vulnerable to fluctuations. How comfortable or able is your company to accommodate this risk?
Take a thorough look at the management structure of the company and research the profiles of its directors and executives. This includes looking at their past enterprises to understand their career trajectories and the business culture they are likely to be contributing. A recent change in management could be a profitable shift or it could signal instability, depending on the individuals involved.
By investigating a business thoroughly, you can identify gaps in their performance or offering where you could sell in your products. Tailoring your services to meet their needs could be the key difference between your success over competitors.