A recent article in Financial Chronicle reported that the Reserve Bank of India is going to conduct stringent background checks on any banks wanting to do business in that country.   Because of the financial meltdown, the RBI’s new policy will be to determine early if any banks seeking business entry into India pose financial risks.   According to the article, there are banks around the world, the United State, Europe, Japan, and China, especially, who are looking to open branches in India.

The economic meltdown has caused a slow down in the number of banks looking to open shops in India.   Many banks, as we know, got into financial trouble.   These banks cannot apply to expand services into new territories until they repay bailout money to their respective governments.

The Reserve Bank of India is demonstrating a great deal of wisdom in conducting these stringent background checks.   Are you doing the same with your business?   It is no secret that the economic downturn has caused a great many businesses to suffer financially.   Some have even closed down, while others are finding it difficult to pay their debt loads.  More than a few are having a tough time paying their debts.

Before you get involved with a business, as a client or a partner, it pays to conduct due diligence in the form of background checks and corporate research.   There are business credit reports that will demonstrate the general health of a company.   These are tools that can be used for pricing that is cost effective, even nominal.   Considering the losses you may face, the ounce of prevention is far more easy than confronting the pound of cure.

Check them out before you do business.  It’s the smart thing to do.

Two famous men are quoted as having proclaimed, “Neither a Borrower or Lender Be.”    One was the bard, William Shakespeare.  The other was Ben Franklin, one of America’s founding fathers, inventor, publisher, scientist and bon vivant.   So here two respected  men living more than a century and a half and an ocean apart, declared with equal fervor, don’t borrow or lend money, or you will regret it.

Of course in their day,  the world economy was an entirely different phenomenon.   A couple, few centuries conducting background checks and business research had its limitations.   Surely, you could ask around if your borrower or lender was in your proximity, but in the global economy, your lender or borrow may be thousands of miles away.    You need information about them.  You need background checks on the individuals and business credit reports for the corporation.   You need to know who you are dealing with.

Otherwise, heed Shakespeare’s words, or Franklin’s, and pay in cash.  Don’t lend money. Don’t borrow it.  Impractical?  Surely.  Improbable?  Certainly.

But pay heed to such headline grabbing fiasco’s as the two principles who founded Hermosa Beach’s Club Sushi.  right here in South California.  It was a success, or so it appeared.  So much so that other locations were planned.  One in Hollywood and one in San Diego’s Gaslamp District.  But then came trouble.  The restaurant in San Diego never opened.  The one in Hollwyood closed soon after opening.

Now two of the owners are seemingly on the lam.  They are accused of falsifying financial and credit information.    It is alleged they used their partner’s credit information, and when the economy turned they closed down and sold off all the equipment.    They are sought for questioning.    While they are innocent until proven guilty, it is safe to say they have a lot of explaining to do.

A sad story.  True.  but there are many such stories out there, especially in this rotten economy.   The story is a lot sadder, if you were the person or company that lent them money, or gave them the equipment on credit.   You don’t want to be that guy.

So conduct corporate research on anyone you are considering doing a venture with.  If you are borrowing money or lending it, run background checks on the principals of the company as well as business credit reports on the company itself.    The few bucks you spend for the ounce of prevention corporate research can afford you is well worth your peace of mind.  Or you could heed the words of William Shakespeare and Ben Franklin, neither a borrow or lender be.   But that was their world and this is the global economy.   That sage wisdom is not the way you can do business today.  So do the diligence.

Check them out before you do business.

Many great businesses started from modest beginnings.   If America is nothing else, it is the place where someone with an idea and a chocolate chip cookie can grow into a major franchise.   In the case of Tariq Farid, featured in Inc.Com,  he started out only wishing to sell fresh fruit artistically shaped like flower bouquets.    A good idea, a lot of work,  some cost cutting experiments, and  his Edible Arrangements was off to a running start.  By the second year his revenue doubled.

Eight months from the inception of Edible Arrangements, someone approached Tariq around franchising.   According to the article, which I urge everyone to read, Tariq said franchising your business is far different than expanding your own chain.   He attributes part of his success by the way to hiring a creative designer for just the right logo.   Very important.

We are happy for Tariq’s success.   Edible Arrangements is the perfect example as to what can be done with innovation, initiative, and even a modest amount of investment capital.   His story is especially inspiring at a time when the economic downturn has forced many employees to be laid off from their jobs.   Many start thinking about the different ways to make a living, and of course the most desirable is to start their own business.

I would encourage anyone with an entrepreneurial spirit, hidden or otherwise, to have a go at it.   But aside, from innovation, creativity, and all the rest, you have to be careful in today’s economic climate.    While most businesses are eager to partner with  a talented and competently run business, either as a vendor or a client, there are predators out there.  This rough economy brings them out of the woodwork or out from under the rock, wherever they lay in waiting.

Be sure your suppliers can continue to provide you with the necessary goods and services.  Make sure they are on solid ground, financially, and that their reputations are such that you would be at a disadvantage in doing business with them.   As for your prospective clients, if you don’t know them, check them out as well.   Often the good news is that you got a new client.   The bad news is you only got them because they had burned all their bridges and you were their last resort.

There are a variety of corporate background checks that constitute business research.   There are bankruptcies, liens, and judgments records, comprehensive background searches on the key individuals, and business credit reports.    There are corporate records searches you can run, as well as county criminal and county civil searches to check on pending criminal cases or pending lawsuits.   Federal Criminal and Civil Searches are important if you are dealing with a financial entity.

It’s a modest investment to help assure you are protected from the predators and scam artists who lurk among the honest business people.  So be bold, be creative, and be bold.   But look around for the minefields that can damage even the best of efforts, and the nasty little creatures who are determined to thrust sticks into your bicycle spokes just when you hit top speed.   Check them out before you do business.

The economic downturn has instituted changes in the trucking and transportation industry.   Where once upon a time the trucking industry could rely on the insurance companies to run its Motor Vehicle Driving Records (MVR) this is no longer the case.   Insurance companies, presumably in an effort to cut expenses have been delegating that responsibility to the trucking companies themselves.

It is essential that trucking and transport companies and for that matter any company that has commercial drivers to comply with Department of Transportation (DOT) compliance standards.   This means a periodic review of all drivers and the background checks that reflect a valid drivers license, good health–The DOT Physical Exam–and the necessary DOT drug testing.    The DOT Physical Exam is only good for two years and then the driver must be reexamined.

It is growing increasingly necessary for trucking and transportation companies to find a background screening company that can conduct the DOT Compliance review for each and every driver, regardless of their geographic location.    By not doing so, a trucking company risks not being in compliance with the DOT.   There is the risk that the drivers may be in poor health, having substance abuse issues, or, often enough, their driving license has been suspended or revoked for serious infractions.

Check them out before you hire.

In the best of times there are nefarious creatures that will take a shot at you.    Scam artists of every stripe can utilize any one of the multiple fraudulent schemes to steal money from your business.   Some of the schemes are relatively new and based in the advanced technology  while others have been utilized for decades if not centuries.  If you think some of the more traditional fraud scams aren’t workable in this day and age, then just think Bernard Madoff and the notorious Ponzi Scheme.

Unfortunately, the Ponzi schemes does not just stop with Madoff.   As I write this there are dozens of persons have been recently sentenced for Ponzi schemes of their own.   Granted, these fraudsters weren’t nearly as ambitious of Madoff.   They only took off individuals and businesses for $100 Million here, $20 Million there, $72 Million over there.   Small potatoes.  Yeah, sure.

The fact is, the lousy economy brings out the worst in people, as well as the best.   While some folks are charitable, others prey on the desperation and misfortunes of others.   They take advantage of businesses who are experiencing declines and are hoping to shore themselves up during the recession.   Scam artists engage businesses as accounts, run up a bill and leave the company hanging for the goods and services.

Even the giant corporations fall victim to scams.   Witness the article on CNN about a New York City woman who has allegedly been duping the monster consumer product corporations for fifteen years or more.    She has repotedly taken off such corporate icons as Proctor and Gamble, Unilever, and Hersey for many millions of dollaars.   It was a simple enough scam, but enough to provide her with a rich lifestyle, status in her community, and houses in cities around the world.

If it happens to the corporate giants, who have IT Security and every other kind of security.   They have ex-federal agents in their employ.   They monitor everything, scanning all the time for fraud and theft.   But still they are also victims to criminal fraud.

When engage a company, or an individual, it is up to you to perform the necessary background checks.   It is essential, in this economy, especially to business research and business credit reports on any company that is unfamiliar to you.   In this recession, even if they are familiar, it may pay to check them out as well.  If not, you could suffer financial loss, public embarrassment, and that awful feeling you have just been left holding the bag.

Check them out before you do business.

Being a hostess had a bad connotation.  Being a hostess in Japan, and it was even a worse.    But the economy has changed all that around.    Today in Japan, being a hostess is looking awfully good.

According to an article in the New York Times women from all walks of life are looking for hostess jobs.   They pay well.  A hostess can earn six figures, annually.   The more prominent ones can earn triple that.   Many women believe it beats being a temp or an office clerk where the pay is low and job security is practically non-existent.

Women believe they can parlay their jobs as hostesses into even more lucrative positions in the media. The job is now an element of pop culture. More than one television celebrity has emerged recently out service in one of the 13,000 nightclubs in Tokyo alone.

Of course, like anything else, when there is a glut on the market, salaries may fall.  Hostess jobs may soon pay twenty-five percent less than they did before.     But hey, the hours are less rigid than office work and the background checks are pretty relaxed.

Granted, this is in Japan where there is a long tradition of women serving men as hostesses.   It is largely in a non-sexual capacity, but some here may still view it as an oddity.   But in a country lost to a recession, where women cannot find work,  they can make a buck as a hostess.   Give these women credit.   They uphold a tradition and fulfill a need.

Who knows?   Maybe it will transition to the USA.   Naw.

Once upon a time MTV was the newest,  hottest thing to reach cable television.  I remember during its early years when critics predicted it wouldn’t last and that viewers would get tired of watching music videos.    Well,  they were right.  Sort of.

The initial model for MTV as it turns out was a good one.   Record companies, back when there was still a music business, provided gratis promotional videos for MTV to air in rotation on its channel.     MTV used video jocks, different than record jocks, to talk their stuff and engage the audience between videos.   There were comments, interviews, more promotionals, and sometimes some funny situations.  It happens when your video jocks are stoned or at least seem like they are.

The videos themselves were thematic and for the time anything for puerile and boring to sensual and cutting edge.   It was a great time to be in the music video business, and more than one director made the crossover to feature films.

then themusic business fell on hard times. Not much sense in making a plethora of music videos for CD’s no one would pay for anyway.   So MTV shifted formats, utilizing reality themese and other situationals to keep running.   We soon had young person’s soap operas, covering all the issues that seem so pressing at youth anf all off the priority list over time.   So whether it was the aging of the audience or just general malaise, ratings have declined.

Now MTV is laying off 75 mid-level executives.   The company blames the recession.   That means 75 more people in the entertainment and media business will be unemployed and looking for work, calling their friends to see what it is out there.  They will encounter a tight market for sure, where more companies  even in the loosey goosey entertainment world are conducting background checks as part of their pre-employment screening process.   With a shortage of jobs and in a lousy economy, employers can afford to be picky.

It will be interesting to see if MTV reconstitutes itself.   As with General Motors and a fair portion of other American industrial icons, it may pose as leaner and meaner.   It may offer the same and accept the decline in viewership as a matter of attrition.   But with 75 more mid-level executives out of work, MTV will have to think of something.

The Republicans in the Pennsylvania State Legislature are pressing for reforms in the way background checks are conducted on applicants for casino licenses.   According to an article in the Pittsburgh Tribune-Review House and Senate Republicans have been pushing for the background checks to be taken out of the hands of the Gaming Control Board.   the legislators would prefer that the State Police conduct these background searches instead.

Democratic Governor, Ed Rendell, has endorses this measure, along with Auditor General Jack Wagner.  Other Democratic lawmakers agree that reforms are necessary but wish to explore other options, before turning the responsibility for background checks over to the State Police.

I would think that most citizens would feel more secure knowing that it was their State Police conducting these background checks rather than the Gaming Board.  For one thing the police are more experienced in conducting these searches and would be more inclined toward being thorough and impartial.   That said, there is always the consideration that law enforcement agencies in other cities have bungled background checks on their own hires.   In Los Angeles, by the time the background searches were return, responsible parties either forgot about them or overlooked them, enabling candidates with criminal records to be admitted to the police force.  So there is always a catch somewhere.

The controversy over who should conduct background checks on gaming applicants in Pennsylvania arose  partly when it was discovered that one applicant for a gaming license may have overlooked his mob ties.   At any rate, whoever is the responsible agency, the prevailing wisdom is that governmental groups better work to coordinate their efforts in conducting background checks.   Far too many incidents arise where far too many people slip between the cracks and are awarded jobs or licenses because of shoddy background searching.

Check them out before you hire.   But do a decent job of it.

Todd Finkelmeyer of the Capital Times has recently posted a list of the ten toughest jobs to fill.  Even in these tough economic times, here are positions that go wanting for candidates.   He lists in his article the following–

The 10 Hardest Jobs to Fill, as reported by U.S. employers for 2009, are:

1.  Engineers

2.  Nurses

3.  Skilled/Manual Trades

4.  Teachers

5.  Sales Representatives

6.  Technicians

7.  Drivers

8.  IT Staff

9.  Laborers

10.  Machinist/Machine Operators

In his article Todd how one employment expert points to the job disconnect.   The expert speaks of the need for retraining so that we do have viable candidates to fill these roles.  It is a good point.

I wonder if as part of a preemployment screening program, the Human Resources personnel should solicit unemployed workers willing to undergo retraining at the expense of the hiring company.   The job applicant, if hired and trained, would then be bound by a contract of sort so that he would remain with that employer for a set amount of time as part of fulfilling his obligation for the training.   It’s a bit radical, perhaps.  But then these times may well call for radical solutions to pressing problems.  Just an idea worth floating.

Check them out before you hire.

It seems like ancient history when credit was plentiful and everyone could have some.   It was the adult equivalent of everybody getting a trophy.   You didn’t even have to be honest or accurate about your financial status in order to obtain sizable loans.   You could embellish about your income.  All right, many outright lied about it.   They charged, they bought, they went into debt.

So now it is time to pay the piper.   And people don’t have the money to pay off the debt they accrued.  There are a lot of reasons for it.  They are underwater on their mortgage loans.  They have decimated what equity they have in their hosues by purchasing designer this, custom that, boats,  cars, assorted trinkets and baubles.   So now there is a problem.   The problem is made worse by the ensuing recession and the employment layoffs that have claimed millions of jobs.    Finding work in an economic meltdown is no fun.  It is even worse if you have bad credit.  And many do.

Increasingly, employers are conducting credit report searches and part of their list of background checks for preemployment screening.  As the recent article in the Los Angeles Times attests, those with failing credit are being ruled out as potential employment candidates.   Whereas in a better economy employers may have been a little more lenient,  the threat of employee theft and fraud makes employers reluctant to higher those with lousy credit history.

The Los Angeles Times article tells the story of people who are struggling to find new jobs in this economic downturn.   The article discusses how some people are not aware they are giving permission for a credit search since the relevant language is embedded in the paragraphs where they sign off.  As with the more spurious mortgage loans, job candidates are claiming they were snookered, unaware of what they are signing.     I suppose the axiom about reading documents before you sign them is cast off to another era.   But that is a matter for another time.

The Times article, which is well written and quite comprehensive, explains how nealry half the employers now conduct background checks.   The article points to threshold that job candidates must meet, before they are considered for employment.

In the near future, I will be posting an article detailing the pros and cons of credit reports.   I will tell you what we, as a background checking service, look for in credit reports.  I will explain how we discern behavior patterns and the things we consider when we review employment credit reports with our clients.

For now, let us say not everything is black and white.  With respect to credit reports there are numerous gray areas.  It helps to be aware of them.  But, meanwhile, check them out before you hire.