Fifteen Minutes of Due Diligence
What fifteen minutes of checking might have prevented.
"Spend fifteen minutes doing due diligence. It could save you a ton of money."
Meet Bill. He sold his company in 2021, making him an instant multi-millionaire. Later that year, a friend he’d known for fifteen years asked him for a $250,000 loan to help grow his business.
After we sold the company, a friend I’d known for fifteen years asked me for a $250,000 loan to help grow his business. I did no due diligence, because fifteen years of friendship felt like all the due diligence I needed.
The business was real and growing fast, and he needed the money for inventory. The plan was simple. He’d make monthly interest payments for two years, then pay the loan off.
For fourteen months, the interest payments arrived like clockwork.
Then one day I’m scrolling Facebook and I see him listing his office items for sale. Desks. Chairs. Computers. The kind of stuff you only sell when the business behind it is gone. I picked up the phone and asked him what was going on.
Over the phone, my friend told me the unfortunate news that his business partner had stolen $2 million of inventory, then cleared out the company’s bank accounts and completely disappeared. The partner didn’t just hurt the business, he completely bankrupted it, the same business I’d loaned the money to.
Here’s what people get wrong about this story. My friend never screwed me. There’s a very short list of people I know would never do that to me, and he’s still on it. The problem was the stranger attached to him: his business partner. I had fifteen years of history on my friend but knew nothing about his partner. If I had spent fifteen minutes searching my friend’s business partner and discovered his shady past, I would have never loaned a dollar. I would have called my friend and told him to run.
Because of this experience, I now do due diligence not only on the companies I’m putting money into, but on the people behind them. You don’t need to hire a professional to do it. Google the person’s name with the word scam after it, and search local and federal court records to see if any litigation or bankruptcies pop up. It costs almost nothing, and it will weed out most of the disasters before you’re standing in one.
Fifteen minutes of due diligence would have saved me $250,000. I’ll never skip those fifteen minutes again.
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