How to Choose Service Providers

When selecting a service provider for their business, some people don't perform the due diligence the task requires. They just take a friend's referral, call someone in an advertisement or hire someone they met at an event. Selecting someone that you met through a referral or event is a good way to get started, but it shouldn't be the only step in a search for a service provider.

Selecting the wrong type of outside professionals can cost the company money and credibility in the investment community. You need to be selective and thorough in your evaluation and choice of key outside professionals.

Most companies need four types of professionals: an accountant, a banker, an insurance broker and a lawyer. The following are 10 questions you should get answers to before you hire service providers.

1. Do they have experience working with Internet companies?

All too often, businesspeople hire outside professionals based on personality or a friend's recommendation. Those kinds of references are a good start, but what you really need to know is whether they have ever worked with an Internet-related business. Do they understand how much money it takes to be successful on a national or international basis? Do they have contacts that can speed up the time it takes to get to profitability?

2. How many years have they been in the business?

Experience is very important to any business, but it could mean the difference between success and failure in a start-up. You want professionals who have been around long enough to have personally experienced the unavoidable ups and downs of business. You should look at professionals with 10 to 15 years of experience, because those people have gone through ups and downs and have learned most of the tricks of their trade.