Running a Small Business

Recognizing and Avoiding Business Scams

Written by Adam Roy for Gaebler Ventures

Recognizing and avoiding business scams is easy once you've been indoctrinated into the important art of scam avoidance.

Entrepreneurship is a hard task with uncertain rewards, so when startup investors or owners actually manage to turn a profit from an enterprise, its through their own ingenuity and hard work.

Recognizing and Avoiding Business Scams

Unfortunately, not everyone has that same work ethic. The more successful a businessperson becomes, the more likely they are to run into scam artists and other predatory con men seeking to lie, cheat, and steal their way to the fruits of entrepreneurs' labors.

Small business owners who want to hang on to their hard-won earnings must take every care to avoid falling for these schemes. Failure to do so could not only deprive entrepreneurs of their personal profits, but can threaten their enterprises and employees as well. With this in mind, it is important to learn how to recognize and avoid not only the more obvious schemes, but some of the subtle tactics that scam artists use as well.

Con men don't wear nametags

While everyone knows to be suspicious of mysterious email messages or sales representatives who ask for your employees' social security numbers, the most skilled, and therefore dangerous, scam artists are conscious of what they look like from a potential victim's point of view. A cautious business owner doesn't make the mistake of thinking that a con man will look suspicious or behave erratically. On the contrary, he or she may be clean-cut and professional in appearance and demeanor. The real test is how they behave when it comes to business dealings.

Trust is best when its written and notarized

While paranoia never pays off, a legitimate businessperson or sales representative will never try to execute a sale or a contract merely on trust. If there is any possible way that you could penalized financially or legally if an agreement is not fulfilled, insist on drawing up a contract prior to completing any type of agreement or financial transaction. In addition, the ideal course of action is to have such an agreement examined by a lawyer or other relevant professional.

If a party in negotiations objects to this idea and insists that you hand over money or commit to a transaction or sale prior to examining and signing a formal contract, treat it as a warning flag. A negotiator or salesperson who tries to rush you through a sale is either unprofessional or unethical. Either way, they should not be involved with your business.

Check their references, then find your own

Unless you are the first customer of an absolute newborn startup, a company that you contract to perform a service for you should be able to provide references or a list of customers who you may contact. After obtaining this list, the best course of action is to call or visit these customers yourself. Email is a convenient medium for unscrupulous agents who wish to falsify recommendations or positive feedback.

However, don't stop at the end of the list that they provide to you. If they are a truly reputable company, then you should receive positive feedback from the vast majority of their customers in general, not only those customers who they know approve of their work. Put on your detective hat and start searching on the net and through your contacts for people familiar with the company and its work.

The more successful you are in your business, the more you have to lose from an unscrupulous partner or contractor. By taking precautions, you can make sure that the snake-oil salesman are left out in the cold and that the future of your business is secure.

Adam Roy is an accomplished writer specializing in business writing and topics of interest to entrepreneurs and small business owners. His own fast-growing small business, Roy Writing, is based in Northbrook, Illinois.

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