Discover the 11 crucial areas of due diligence often overlooked by business owners, from hiring practices to cybersecurity. Learn why insurance coverage must be regularly evaluated, illustrated by a company's struggles due to inadequate protection. Explore the significance of aligning with investors whose goals match yours, highlighted by a pub owner’s cautionary tale. Plus, dive into the impact of social responsibility on brand reputation, urging adaptations to meet societal changes for long-term success.
Proactively monitoring employee behavior and implementing continuous background checks can significantly reduce risks associated with hidden misconduct.
Establishing strong internal controls and conducting regular financial audits are essential to protect a business from fraud and enhance operational integrity.
Deep dives
Hiring and Human Resources Vigilance
Maintaining a robust hiring process involves not just finding the right candidates but also ensuring ongoing surveillance of employee behavior. Many employers fail to monitor their employees after hiring, which can lead to significant risks if an employee's situation changes, such as involvement in criminal activity. Implementing continuous background checks or requiring employees to disclose certain changes in their circumstances can help mitigate these risks. This proactive approach can safeguard against potential liabilities that could jeopardize business integrity.
Internal Controls and Financial Audits
Establishing strong internal controls and regular financial audits is fundamental to protecting a business from fraud and theft. Businesses should create processes that prevent unauthorized access to financial assets and equipment, a practice underscored by the necessity of mandatory vacations in certain industries to expose any misconduct. For instance, an owner's discovery of hidden profits after recognizing employee theft demonstrates the value of diligent oversight. Consistent financial oversight ensures the integrity and viability of the business while safeguarding valuable assets.
Legal Compliance and Contract Management
Legal compliance through well-drafted contracts is essential to prevent disputes and protect business interests. Regular reviews of existing contracts, engaging employees who use these documents, ensures that they address recurring issues with clients. Collaborating with legal professionals to tighten contract language can reduce vulnerabilities and safeguard against potential losses. This ongoing assessment promotes a proactive culture of legal compliance, helping businesses navigate the complexities of their operations more effectively.
***New Video Alert!
What happens once you own a business.
Just clear sailing and profits, right?
NOPE- You’ve got to have a continuous attitude about due-diligence in these 11 areas to keep from having to deal with out of control situations growing without your notice.
I’ll walk you through it in this week’s video: https://youtu.be/gKrf_lkY6NE
Cheers
See you over on YouTube
David C Barnett
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