Signs of a serious business for job seekers?

March 3, 2010 8:34 AM

How can you find out if companies you're interviewing with are running a serious and stable business?

There are many small companies and organizations out there. Some of them are good at what they do and have a great future, others are full of fluff, bad credit and false hopes. Some might even be scams. What advice do you have for job seekers on how they can show due diligence when preparing for interviews?

(obviously, if there was a clear answer on that, venture capitalism would be much easier - so maybe VC tactics to find out how companies are doing might be helpful)

posted by lord_yo to work & money (10 answers total)

If they are registered with the Better Business Bureau, you can check with them.
posted by orange swan at 8:40 AM on March 3, 2010

orange swan beat me to it
posted by deezil at 8:40 AM on March 3, 2010

I think an individual can run a D&B report for about $30.
posted by These Premises Are Alarmed at 8:46 AM on March 3, 2010

BBB is kind of a shakedown. For non-profits, I like to always check guidestar.org, which provides IRS 990 forms for free. You can figure out what the CEO earns, who is on their board, and some juicy budget information.

Professional looking Web sites, a working phone number and contact information are always useful. Companies should never charge an application fee or charge you to run a background check during the interview process. Most of all, trust your gut and your spidey-sense. If you don't like it, don't work there.
posted by sdrawkcab at 9:00 AM on March 3, 2010

I'll answer the question for the case of small start-ups, these are not your mom & pop businesses that have been around for a while & that the answers above address.

For new start-ups that don't have any customers or revenue there will be no BBB info. They will usually use cash & credit cards with vendors because its takes quite a while to establish credit. They will not have a D&B number.

Risk in these early ventures is high. If you're looking to work for this type of company then the best questions to ask are:

"Are you profitable?", if so then its really passed the start-up stage. If not, then...

"Who are your investors?"

"How long will you current money last?"

You want to hear that they have at least 6 months money, if not then recognize that you're stepping into dicey situation. You want to hear they have A-List investors. If someone with a lot more knowledge than you and complete access to everything the company has for due diligence purposes has decided to give them money then that's the best endorsement you can find. That said, plenty of smart investors still give money to really dumb ideas, but your unlikely to make a more informed decision that they did on the company's prospects. Working for these type's of business is always going to be more risky than working for big stable companies.
posted by Long Way To Go at 9:25 AM on March 3, 2010 [1 favorite]

The BBB and D&B stuff is faked fairly easily it's not an indicator of whats going on behind the scenes. In the interview ask about how broad of a skill set they want you to have . I'll use my field (computer programming) as an example; say they want you to be a programmer, who can also do customer phone support, and graphic design work and product QA; these are all somewhat related but ideally would have an individual person doing each job, companies that try and cram 3 or 4 roles into one employee are a) strapped for cash or b) cheap and don't value individual skill sets.
posted by Scientifik at 9:37 AM on March 3, 2010 [1 favorite]

D&B reports be easily faked? The PAYDEX score is like a FICO score, it depends on creditors reporting on when a company pays their bills. If you buy the $60 report, you get a fairly comprehensive 12-month history of whether they pay their bills on time or not.
posted by AlsoMike at 10:29 AM on March 3, 2010

"Pretend I'm one of your potential clients, and you want to sell me your product. I'd like to talk to some of your past clients to see if they're willing to share their experiences in working with you. Who should I talk to?"
posted by Cool Papa Bell at 10:47 AM on March 3, 2010

The PAYDEX score is like a FICO score, it depends on creditors reporting on when a company pays their bills.

Many small companies don't get D&B numbers and many companies don't always report late or non-payment to PAYDEX
posted by Scientifik at 10:55 AM on March 3, 2010

I remember pulling the D&B report on the small company I worked for. The CFO had a laugh when I showed it to him. We couldn't even figure out where they'd gotten the data they had, but it was pretty incomplete, out of date, or just plain wrong.

As others have said, the right way to get the info really depends on the type of business. If its a startup with outside investors, it will probably fail, but Long Way To Go has good suggestions on how to figure out how soon they are likely to fail (if they fail).

If its a small business that's been around a while, then the question is whether anything has changed recently, or is about to change.

* Why are they hiring? Is it a replacement due to normal attrition? Is the manager you'd be working for new to the role (maybe they suck, and ran off a good employee, or maybe they are great and cleaning just cleaning out dead wood, or someone quit because they were hoping to be the new manager).
* Are they hiring because they are growing? Is that growth being funded out of profits, or are they relying on financing or outside investment. If they are relying on financing or outside investment, how soon do they expect profitability? How aggressive are their growth targets? For example, are they borrowing to add one new office/store at a time, or are they trying to grow 5-10x as fast as they can spend the money to get there?
* Is the line of business they are in in the midst of major changes? For example, a company specializing in supporting basic networking for small businesses might see a lot less business supporting microsoft exchange and file servers as that sort of thing gets commodified by Google and Microsoft. But that's not the whole story. They could be in for a lot of hurt if they just stick to their knitting. On the other hand, they could do really well specializing in transitioning businesses to cloud services, and helping them put the savings into enhanced services.
posted by Good Brain at 12:32 PM on March 3, 2010