The definition of due diligence:
- appropriate carefulness: the degree of care that a prudent person would exercise, which is a legally relevant standard for establishing liability
- standard of proper disclosure: the disclosure to potential buyers of all relevant information that applies to a security issue
Homework is imperative before the purchases of a franchise or business. Research and Analysis is necessary prior to investing in a business so that you make the best decisions and choices prior to the purchase. Determine the right person who will do the research and analysis. Involve the professionals and seek their advice…i.e., attorneys, accountants, consultants, and investment experts.
- Make a checklist of all the information or data you need to make an informed decision. Make sure your list has all the particulars from the beginning to the end of the purchasing process and prioritizes the list.
- Get all the stats from the company that you are purchasing. What does their success rate look like? What products do they provide? How do they go about marketing their product? How does training impact the business?
- Ask other clients, customers or business owners in the same business, how they have fared in their business. Ask them the pros and cons of the purchasing transactions and their success rates.
- Review all documents such as financial statements, and business plans relating to the business. Talk to other business owners in the same business about their success in purchasing the business.
- Check out the competition and other external resources for reference as to where your potential company will fit. Look at the marketing aspects of competitors and see how they advertise.
Be knowledgeable about business practices, financial, and inventory
Due diligence will help you save time and money in the end.
Determine the materials necessary to conduct due diligence it applies to your particular investment.
Due Diligence includes looking at the future the potential of the business.
In conducting due diligence, include the business strategy, corporate culture, information technology operations and capital.
Due Diligence can make or break a business opportunity, but offer you the knowledge, tools, considerations and decisions for you to make an informed decision.
In the Cruise Ship Industry, you can begin your Due Diligence by contacting the Director of Franchise operations, Dan Hicks at Cruise Planners/American Express. In doing so, you are already providing due diligence for yourself by choosing the best well-known cruise industry company and representative to make your potential investment, a realistic one.