How to spot bad deals

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A bad business deal could cause a lot of damage. But thankfully, there are warning signs that one ought to watch out for. It’s better to be safe than sorry

Seems too good to be true

Listen to your intuition. According to www.businesscollective.com, if it’s too good to be true and everything seems to be moving too fast, then it’s time to slow down. If a client appears to be offering you a business deal that appears to be just a little too good to be true, take a step back and evaluate the offer carefully. Not every business deal is what it seems. Don’t be afraid to question any deals that come your way.

Consider your options

Not all bad business deals are easy to identify. Sometimes, only after the deal is closed do the cracks start to appear. By then, it’s too late. However, if you consider each of your business deals carefully, you stand a much better chance of avoiding these deals when they pop up. Don’t settle for the first deal that’s laid out on the table. As a business owner, you should position yourself strategically by giving yourself options. The more business deals you have to choose from, the more likely you’re going to be able to weed out offers from clients that don’t really add up.

Delays, delays and more delays 

One of the most frustrating things about business is that from time to time, some deals just take forever to close. It could be anything from financial processes to ironing out clauses in a contract. Whatever it is, the longer these circumstances continue, you should perceive them to be red flags. Stalling tactics are the hallmark of a bad business deal, so if a client or company is continually holding up a business deal process; pull the plug on it.

Communication is key

With all the smartphones and technology at our finger tips that enable us to communicate via email etc., it should never be too difficult to keep in touch with individuals you are conducting business deals with. Another dead give-away about a rotten business deal is not being able to stay in touch with who you are doing business with. Doing business with these clients is perilous because if they can’t respond to your messages in a timely fashion, just imagine the kind of business deals they have to offer.

They don’t explain their reasoning

Every company is different, but folks who rely on faulty business practices share a number of common traits. One of them is an over-reliance on concepts like career advancement, or the insistence that they offer a great opportunity coupled with an unwillingness/inability to elaborate further.

They make late payments

While it is not always ideal to write off business partners based on their immediate circumstances, as they may have some long-term potentials, but if your clients can’t pay their bills, they may not be managing their business well, and you may be the next victim trying to collect an unpaid balance.

Research

Being able to spot a bad business deal can be done via some good old-fashioned research. You should know who you are doing business with at all times. If a client or company is unable to provide proof of their company and that they are a registered business, avoid doing business with them. Any client or company who cannot provide registered proof of their business is not worth doing business with.

Not understanding technical details

You can’t expect to know more about a particular aspect of business operations than the vendor who hopes to provide that necessary resource. If, during negotiations, you feel you’re not fully grasping the technical details of the contract, you may need to reach out to a knowledgeable third party who can review the vendor’s proposal with you and explain it in simple terms. Before you meet with potential business partners, learn the jargon associated with their field so you know what they mean when they use it in discussions. This will help you frame the conversation in terms that make more sense to you.

Agreeing to a contract with unclear provisions

Beware of contracts with questionable auto-renewal clauses or provisions with pre-negotiated price hikes. If provisions seem unclear to you, don’t hesitate to ask for clarification. Identify specific elements in the contract that you know will improve your business operations and request they be included. Most suppliers will be reluctant to walk away, knowing you can negotiate with other potential providers. In any case, you’ll avoid spending money for something of no benefit to your business.

Beware of outrageous discounts

Always look closely at any discounts vendors propose that seem too good to be true. A discount is only as good as the overall price offered. For example, if an IT provider offers you a hefty discount on a comprehensive package of services, look closely at all the contract requirements and conditions. The discount could end up costing you more in the long run if that provider charges high prices for ancillary services, such as on-site support or additional software solutions.

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