How to Perform Vendor Due Diligence

Performing vendor due diligence is extremely important in the B2B space. So many service providers aren’t who they say they are and cannot do what they say they can do. Nothing is more hazardous for a business than outsourcing to the wrong company. Listen in to hear how to mitigate risk for your business and make sure you’re hiring smart.


Welcome to the In the Clear Podcast. I’m your host, Justin Recla, and today I’m going to be answering the question of how do you perform vendor due diligence? I absolutely, absolutely love this topic. It’s one that we often get from people who don’t think they need due diligence. A great example of this is we were … Tonya and I were giving a talk at a local group and one of the women in the group was like, “Well I’m a caterer. I don’t need due diligence.” We started asking some questions and it got the gears turning. You know, one of the first questions was, “Do you cater for hotels, events, weddings, that kind of stuff?” She’s like, “Yeah, weddings are my primary thing.”

“Okay. Well do you provide all the chairs and tables yourself or do you rent them?” “Well I rent them,” she said. I said, “Okay.” Then of course my next question was, “Do you use the same vendor every time or do you use multiple vendors depending on the location of the event?” She’s like, “Well multiple vendors, of course, because if I have to do an event in Northern California, I’m not using a vendor in Southern California.” “Oh, so it changes depending on where you’re going.” She’s like, “Yeah.” I said, “Well wouldn’t you like to know whether or not the company that you’re hiring, that vendor that you’re hiring has a history of actually delivering chairs on time or providing all the silverware or whatever it is you need for the event? Wouldn’t you like to know if they had a past of … If there was trouble with them not actually following through with the agreement and what they’re saying they can do?” You could see the light bulb went on. She’s like, “Oh, yeah. That would be bad.”

Seriously. That’s what due diligence is. It’s what doing vendor due diligence really consists of is asking, “Okay. Play the what-if game. What if they can’t do what they say they can do? What if they don’t deliver the projects on time?” You have to really start thinking about those things because if we’re going to spend any amount of time or money with somebody, if it doesn’t work out, right? Then that means your project is delayed. You’re out that money. Your typically going to be out even more money because now you’ve still got to get the project done or the event done. Whatever it may be.

Yeah, it’s something that’s quite overlooked. That applies to vendors to include service providers, to include website designers, to include marketing people. Anybody that you’re going to get a service from and they’re going to provide you with, you have to do that due diligence. You have to know what you’re paying for, what you’re getting. You’ll have so much peace of mind in knowing that you did a little bit of due diligence. Here’s what I love. Our solutions are super affordable. It’s not going to break the bank. You can do a red flag vetting for like $147. It’s not going to kill you, but here’s the deal even more is that you can do so much on your own without having to outsource it that … To give yourself peace of mind.

That’s just knowing where to look, what questions to ask and so forth. We’ve been talking about how to do vendor due diligence. When we get back from the break, we’re going to go over exactly how we do vendor due diligence, from service providers to marketing people. I’m going to go over exactly how that looks for your business right after this message.

Welcome back to the In the Clear Podcast. I’m your host, Justin Recla, and prior to the break, we were talking about how to do vendor due diligence. Whether or not you’re hiring a website designer or you’re a caterer hiring somebody to deliver your cables, how do you really vet someone? How do you do due diligence on a vendor? Well it starts with the questions. Some of those first questions, and we talked about this in our past episodes, are what do you know about the person, how do you know, what do you need to know to make an educated decision. What does that look like for a service provider? Well first you have to remove yourself from the situation emotionally, especially if you like the person and so forth. You get along and they might have a great personality. Whatever. You have to remove the emotion from it. You have to step back and look at things critically.

That’s really starting off with the basic stuff and asking certain specific questions. Our favorite question to ask is, “How do I do my due diligence on you?” One, the person may or may not know how to respond to that because they may or may not have heard it before, but they should be at least … If they’re on the up and up, they should be willing to say, “Okay. Well what does that mean exactly?” You can explain to them, “How do I verify what you’ve done and who you’ve done it for?” Then of course if they’re serious about getting your business, they should be more than willing to answer the questions that you may have and of course they’re probably going to provide you with references. Call those references, right? Call those references and ask lots of questions.

A lot of people are like, “Okay. Well if I ask that, aren’t they just going to give you the two or three most favorite people that love them the most?” By all means, they probably are going to, right? That’s just the way it is, but still call those people. Still get a good feel. There’s two questions that you can ask a reference. One, ask the reference for a reference. Get that person’s name and call that person and ask a question. Then ask, “Is there any reason somebody might say I shouldn’t work with Joe Bob?” If they know something … It’s our experience that humans want to be helpful and if they know someone who got screwed over out of some money from somebody that they know, asking the question in that way gives them a roundabout way to save face and still at the same time share the information that they know that Joe Bob may not have the best of reputations or business experience.

The response might sound something like, “Well you know, I haven’t had this experience, but I heard he had some bad luck with such and such client.” “Awesome. Can I get that person’s name?” Now call that person and ask them questions. “Hey, I heard you worked with Joe Bob and I was calling to get your opinion, your experience with Joe Bob.” Those are two questions that you can ask a reference. Then really dive down and get specific of what you are needing from the vendor and ask, “Okay. Well this type of website or this type of service, who have you done it for? What types of success did you see? What issues did you have?” Just really dive down the rabbit hole with that. What do you want to know?

Play that what-if game. What happens if it goes bad? If they can’t provide you answers that provide an imagery in your mind, that play out like a movie, then you don’t have enough information. If there are deliverables, what are those deliverable dates? How long does it take? What happens if it’s not delivered on time? What’s your refund policy? Just some of these questions will arm you with some knowledge ahead of time. Should you choose to get involved with them, you’ll at least have an understanding of how they work. If anything, it’s definitely going to paint a really good picture for you on how they communicate. That plays into the whole intuitive due diligence that Tonya and I talk about all the time.

Start asking those questions. Start really digging down and saying, “What do I know and how do I look into this business? What could go wrong? If it goes wrong, how does that impact my business?” Take the five or 10 minutes. I’ll tell you, it doesn’t take that long. Dive down that rabbit hole. If you can’t do it, have somebody on your team that can, but it is essential to your success and when you implement a process like that into your business, your level of success just increases over time because in doing such, by doing that critical thinking, by asking those questions, by taking on a due diligence mindset with anybody you bring in your organization, it literally up levels your entire business because you’re thinking completely differently. It translates over into all other areas of your life as well. It’s extremely powerful. Extremely powerful.

If you have any questions, feel free to shoot us an email at Again, we’ve got a directory full of service providers that we’ve already vetted for you. Take a look. Give them a call. A lot of them are throughout the nation, yet they have virtual businesses. Somebody might be in New Jersey, like our website friends over at Dot-com. They might be in New Jersey, but they can service your website design needs here in Chicago. Take a look at some of the people that are in the directory and look there first because we’ve already vetted for you. We’ve done the due diligence for you. They are who they say they are. They can do what they say they can do. You can go read their transparency report so you know everything about them as well. It’s right there in the directory for you to review.

Until next time, before you get involved with anybody in business, make sure that business is in the CLEAR Business Directory and visit for more information. Until next time, thank you for your trust and we will talk to you soon. Bye-bye.


About the Author:

Justin Recla has over 13 years experience and advanced training with the US Army and federal government. He is a subject matter expert in tactical questioning, surveillance, counter espionage, threat and vulnerability assessments, and investigative techniques. He is an educator in concepts of effective communication and has taught hundreds of future federal agents how to conduct interviews and investigations. Justin brings his skills from the military sector and delivers them to the boardroom to help business owners protect their two most valuable assets: Time & Money.
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