As business owners, our main objective is to move our companies forward. In the beginning, this often looks like jumping on every opportunity we can, saying yes to everything and landing every deal we can muster.
However, there will come a time when this no longer makes sense. With experience, you learn that not all deals are created equal and that saying “No” is actually the appropriate course of action.
Sometimes you’ll need to spend some time mulling over a deal to make the best decisions. Other times, it’s shockingly apparent that you need to run away as quickly as possible. Here are three warning signs that you need to run away from a business deal – fast.
They don’t want to discuss financials.
It’s no secret that the entrepreneurial/venture capitalist/startup space is filled with a lot of smoke and mirrors these days. Just go to any “tech” event in a major city and you’ll quickly realize half of these startup founders have no idea what they are talking about and are actually broke.
As a columnist who gets pitched Now, I’m not saying you should be as cutthroat during business dealings, but it is in your best interest to find out what’s going on financially – especially if you plan on partnering up with someone for a business venture. If they don’t want to discuss financials, take as a big giant red flag that something isn’t right.
There’s more hype than substance.
A VC friend of mine once said to me, “I went to this event for startups and all they had were models, a DJ, and free drinks. None of the companies in attendance were serious.”
It’s a frustration I hear all the time from the serious investors I know. They want to invest in startups, but when they head out to these events they are finding more and more hype instead of substance.
The good news is it’s pretty easy to tell when a potential business deal is based on hype. Usually, your gut is screaming “Mayday! Mayday!” and you have more questions than answers. Other tell-tale signs include name dropping, sucking up all their air in the room and not even being totally sure about what the person is selling.
The problem is hype-men are usually very confident- which is why they can sell anything – so it’s your job as a business owner to be just as sure of yourself as they are. Otherwise, you run the risk of doubting yourself, giving your power away and ending up in a bad deal.
All parties involved are confused.
It should go without saying that if you don’t truly understand what the other party is proposing, then you probably shouldn’t take the deal.
Although, sometimes it’s not a matter of not understanding. Sometimes it’s simply a matter of two parties not being a good fit for each other.
This is something I recently witnessed as a The end result is they passed on partnering up together and it was probably the best decision they could have made.
Final Thoughts
As a business owner, you will learn that not all opportunities are created equal. By looking for these signs, you’ll know which “opportunities” you need to decline.