Warning Signs of a Bad Business Deal

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Let’s face it.  It doesn’t matter if you are a good financial advisor or not, there’s always a chance that someone is going to convince you to give up more than you should.  However, some of the most costly decisions are usually related to business arrangements, which means that you may want to know some of the warning signs of a bad business deal.

 

Everyone has made a bad deal at some point.  In fact, you may have paid $200 for a new gadget that didn’t quite work as advertised, agreed to help someone who lives on the ninth floor of a place without an elevator move in exchange for pizza, or bought a car from a guy who has a very different idea of what the phrase “it may need some work” means than you do.  However, regardless of what you may have agreed to in the past, the most painful deals that you can make are usually related to your business.  This is because it doesn’t matter what is your business you’re in, a bad business deal can cost you thousands, if not, millions of dollars in legal claims, refunds, and other unexpected costs.  As a result, it’s always a good idea to know the warning signs of a bad business deal.

 

The first sign that you may be making a bad business deal is that the person you’re dealing with is a little too eager to close the deal.  In most cases, if someone wants you to sign a contract before you leave the room, is offering you everything that you want plus their first-born child, is trying to strong-arm you into agreeing to terms that you are uncomfortable with, or wants you to make a decision before the contract has even been written, they’re probably trying to scam you.  Any legitimate supplier or business associate will be more than happy to negotiate the terms of your arrangement, write up a contract, and let you read the contract before you sign it.  This means that if you’re dealing with someone that isn’t even trying to negotiate, you may want to think twice before you agree to anything.

 

The second sign that you may be making a bad business deal is anything that doesn’t quite make sense.  In other words, if you don’t understand the contract or the person that you’re dealing with is trying to baffle you instead of dazzle you, there may be a problem.  As a result, if you’re trying to make an arrangement for something that is outside of your area of expertise, you may want to get some outside help from someone that actually understands the type of arrangement that you’re trying to make.  If, on the other hand, you are familiar with the area that you’re dealing with and you still don’t understand the contract or the person you’re talking to, it’s usually a good idea to thank the person you’re dealing with for his or her time and walk away.

 

The third sign that you may be making a bad business deal is that the person you’re dealing with seems uncomfortable with the deal.  This warning sign may sound a little odd because the ultimate goal of any negotiation is to get everything out of the deal that you can.  The problem is that when the person you’re dealing with is uncomfortable with the deal, there’s a very good chance that there’s a reason why.  It may be that the individual you’re dealing with agreed to something that his or her company cannot afford to do, something that his or her company lacks the ability to do, or something that just cannot be done in the time frame that you have set out.  In the end, it doesn’t matter why the person is uncomfortable with your deal, it just matters that there’s a pretty good chance that you will run into problems if the person you’re dealing with is visibly upset.

 

The fourth and final sign that you may be making a bad business deal is that the contract contains clauses and/or provisions that make it very difficult for you to walk away from the deal or renegotiate the deal.  This is important because every contract will contain something  that explains when the arrangement will begin and how long it will last, but you should always keep an eye out for clauses that may require you to use the same individual or business for a very long period of time, clauses that make it extremely difficult  for you to switch to another individual or business after the contract has expired, clauses that require you to purchase a set amount each year, and/or clauses that contain other similar restrictions.

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