“What’s in a name? That which we call a rose by any other name would smell as sweet.” –William Shakespeare, Romeo and Juliet
While names might not have mattered to starred-crossed lovers Romeo and Juliet, they should matter to you. Suppose, for example, that you have been selected to enter into a contract with what you believe to be a top 500 company. You are excited about the project and you know that this is a solid company who might give you future work. But, when the draft contract is sent to you, you notice that the party you are going to enter into a contract with is Onetime Project, LLC.
Should this keep you from entering into the contract? Not necessarily. However, you should stop and ask more questions.
- What is Onetime Project?
- Does it conduct any business other than this project?
- Does it have any assets?
- Who owns this company?
- Does it have the ability to pay you for your work?
Ask the people that you are working with sufficient questions so that you know what you are getting into. You may decide to proceed, but you should consider ways to mitigate your risk:
- Upfront deposit
- Modified deadlines for payment
- Negotiate solid termination provisions with short deadlines to terminate the contract if you are not timely paid
- Personal guarantees by the business owners or parent company
- Letter of credit
- Surety bond
If you ask the right questions up front, there are many options available to lessen your risk if your new business partner is merely a single purpose entity. Consider the name and ask the right questions so that you can enjoy a successful business relationship.