7 Red Flags in Small Business Deals

“There’s a flag on the field.”  You know them when you see them – or hear them.  Those red flags that tell you something about this business deal just isn’t right.  And you know that, no matter how much you want this customer – this partner – this vendor – this business – this office — the relationship is doomed to failure.

Business “red flags” can come from anywhere.  For example:

An Offhand Comment. “We need a cute blond around here to attract male customers.”  A business owner told me about this one.  She was talking to a professional about a partnership.  She asked me, “What should I think about that?”  My comment: “You should probably think you don’t want to join this partnership.”  This “red flag” comment got me to thinking about other red flags that come up in the course of business deals.  Some other examples:

An Attempt To Go Outside the Law or Cut Corners. “We can do this without telling the IRS.” “We can write up this contract ourselves without an attorney, to save some money.”

A Contradiction. The leasing agent says, “The A/C works fine, ” and the other tenants say, “It never works.”

The “Razzle Dazzle.” You read the contract and think, “It would take a rocket scientist to figure this thing out.  Must be trying to hide something.”

What isn’t Said. You ask questions and get vague answers.

The Atmosphere. The furniture and fixtures are shabby and run-down.  The office smells like mildew.  The bathrooms have spots on the floor that look like they’ve been there since before the war.  The furnace makes strange noises.

Bold Assertions. “You can trust me.”  “This is the best deal you’ll get in this town.”  “I’ve checked all over and this is the lowest rate you’ll find anywhere.”

What do you do when you come up against a red flag as you are negotiating a business deal, hiring an employee, leasing an office, or buying or selling a business?

I know what I do – run like heck!  One red flag on the field means there are many more hidden somewhere – kind of like Easter eggs. No matter how great the deal sounds, it is probably time to move on, find another deal.  Trust your instincts on these things.  You’ll be glad you did.