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What You Can Learn from Company Research

Do you trust that your clients will pay, your partners will stick to their agreements, and your competitors aren't doing anything that affects your company's well-being? In the world of business, trust often depends on how much you know about the companies with which you're doing business.

Where you look for that information and what you find typically depends on the size of the company you're trying to investigate and whether or not it's publicly owned. Small, privately owned companies are more difficult to research because they aren't required to make public much information.

One of the first places you should search for information on private companies is in your local newspapers. Don't limit your search to one paper or to the front section. Comb the real estate and business sections and, if the paper has one, the local gossip column. Most newspapers today have Web sites equipped with search engines, which makes research easy. But some papers don't archive their full publications on the Web, while others archive only two weeks' worth of material. Some library legwork might be called for.

What you can find out about private companies:

  • Hints about their financial situation
  • The date the company was founded
  • The number of employees
  • Revenues
  • Real estate issues, possibly including recent rental or building projects that might make money tight
  • Personnel issues, including promotions, hires, and layoffs

Research on publicly owned companies is much easier to obtain. The reason: By law, public companies must reveal their strategic plans, annual profits, investments, and losses. Electronic Data Gathering and Retrieval System (EDGAR for short), of the Securities and Exchange Commission, is a treasure trove of information on public companies. Edgar includes annual reports as well as offerings to sell stock.

What you can find out about public companies:

  • Operational details
  • Salary information on officers, directors, and certain shareholders
  • Fringe benefits and transactions between the company and management
  • Financial statements audited by an independent certified public accountant
  • Competitive positioning
  • Terms of contracts and leasing agreements
  • New business objectives and the tactics they will use to achieve those goals