Discreet Questions to Determine Financial Viability When Outsourcing — Part 5
Outsourcing manufacturing operations can deliver tremendous benefits to your business. Unfortunately, there are many risks attached as well. Today we continue discussions by addressing Discreet Questions to Determine Character Compatibility and Financial Viability. Asking tough questions will help narrow down your selection process.
This post is Part 5 of our series on Outsourcing Custom Manufacturing Operations. In particular, Outsourcing Wire Harness Manufacturing Processes.
Previous topics have included:
Outsource Your Wire Harness Assembly Process — Part 1
Selecting a Wire Harness Manufacturer — Part 2
How to Find a New Wire Harness Manufacturer — Part 3
Interviewing a Wire Harness Manufacturer — Part 4
Discreet Questions Can Save You Down the Road
So you have entered the interview process to select a new custom manufacturer to partner with. Now you are digging deeper in the due diligence process to see who is exactly the best fit.
Financial stability is certainly one of your absolute top concerns. If you are both small businesses, discovering actual financial figures or intimate information may be difficult to obtain. Even though this is crucial, especially if the project or product represents a significant portion of your sales.
So what steps or strategies can you take to discover the financial viability of this new prospect?
Below are a number of discreet questions that you could ask that would potentially reveal any red flags for you.
Prior Outsourcing Experience — That Ended Poorly
This blog is being written from a poor previous experience with outsourcing services to a fulfillment center. There were many warning signs. Actually, what is above warning signs? Shots fired across the bow?
We would pay the company tens of thousands of dollars each month which was paid on our credit card. On two separate occasions, the company ran our credit card twice, on the same day. The first time seemed like a simple mistake. “Oops, our credit card processor must have processed the card twice. So sorry. We will issue a refund.” Which they eventually did, many days later.
The second time, same excuse but now had our team gravely concerned. To make matters worse, it was discovered that the property and liability insurance had not been paid. Needless to say, the relationship ended very poorly. We moved out at a huge expense. The fulfillment center went out of business so after. Even though we thankfully dodged a major disaster, this was a painful and expensive lesson.
Important Questions to Ask Yourself
Here are a few questions to ask yourself through this process:
- Does the company represent itself well?
- Do you have similar goals and a common business philosophy?
- Is this a team of people with integrity that you can trust impeccably?
- Is this a partner that is committed to your profitability and success or are you another opportunity for the owner to support a lavish lifestyle?
Discreet Questions to Determine Character, Compatibility and Financial Viability
Here are a number of discreet questions to consider to help determine the financial viability of the company as well as the character level of ownership:
- Strike up a conversation on hobbies. Do they have expensive hobbies: Golf at Pebble Beach, mountain climbing the Himalayas, scuba diving off the Thailand, flying a helicopter, Yacht, own a collection of Ferrari’s, etc… you get the point.
- Find out the type of car they drive. “My spouse is looking for a new car. What type of car do you drive or recommend?”
- If you live near the prospect, casually ask what neighborhood they live in. Sorry to get overly “stalkerish”, find out their neighborhood and drive by or if you are not nearby look up on Google. This will let you know their lifestyle.
- Ask for bank references
- ……business references
- ……character references
- ……customer references
- Google the owner to discover any past felonies, convictions or other bad news.
- Check their Facebook page — see what they do in their personal time.
- Check other social media — Twitter, Snapchat, Instagram, and Pinterest.
Round II
- Look for Videos on YouTube.
- Check mutual connections on LinkedIn.
- Seek out mutual professional connections and casually start asking around for any character concerns.
- Take a physical tour of the company and facility — look for any warning signs.
- Meet with company supervisors.
- Casually speak with as many employees as possible to get a gauge on the owner/management and conditions of the company.
- Look for matching or mismatched priorities — expensive office furniture, overstaffed, excessive non-business essentials (foosball table, games, kegs, etc).
- Get a gauge on morale at the company.
- Does the owner wear an expensive wardrobe or jewelry?
- Last, ask the owner for an opportunity to have a mutual meeting with their accountant to view audited financials. Even offer to have the meeting at your expense.
Going the extra mile with your due diligence process will save you a tremendous amount of grief and frustration down the road.
Wrapping It Up
Asking excellent questions goes a long way with any relationship. This list is just a suggestive list of helpful questions to consider when Interviewing a Wire Harness Manufacturer.
Lastly, Thank you for taking the time to read this post.
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