Would you spend three years watching slow motion video of people pouring wine?
Probably not, but biophysicist Daniel Perlman did, as part of his quest to invent a wine bottle that doesn’t drip.
He discovered that glass is hydrophilic, that is, it attracts liquid. So when we pour wine, it curls backwards over the lip of the bottle and drips down the side. To fix this problem, Perlman created a groove just below the lip of the bottle that stops the back-curl.
Perlman successfully designed a new type of wine bottle because he did the required research. He based his plans on reality and observation rather than wishful thinking.
Research is the critical step whenever you are embarking on new commercial relationships with people you don’t know. This due diligence enables you to verify their identity and reputation, so you can minimise your risk.
The most basic of the enquiries you should make and information you should ask for, include:
- personal identification;
- tax returns;
- bank account statements;
- referrals and references;
- clarification of business experience;
- credit checks;
- bankruptcy search.
Not every commercial transaction requires every type of research; it all depends upon the nature of the transaction.
For example, if you were providing a loan or credit facilities, then asking for a credit history and references would be pertinent because you need to ensure that the borrower can honour the loan.
If you’re leasing commercial premises then you need to ask about the prospective tenant’s business experience, business structure and financial position.
When you’re dealing with a company, you need to dig a little deeper.
A company is just a legal structure and is quite meaningless when it comes to determining who is actually liable if something goes wrong. If you’re dealing with a company then you need to know the identity of all the directors and /or shareholders who stand behind the company.
How do I do a company search and a bankruptcy search?
Two of the most common search portals in Australia are Equifax and Citec.
These search portals are available to search a large number of different registries, including AFSA (bankruptcy searches), ASIC (company searches) PPSR and land searches.
Generally you register, pay a fee and then you are able to do any number of pertinent searches.
Doing the right research gives you the assurance that your new business contact is reputable and able to fulfill their promises. While it might take a little time and effort, it won’t be as bad as spending three years watching the way wine pours!
