Why are director searches important?

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In the UK, all registered businesses will have at least one company director, and these might not always be the owner of the business.

The only requirement for becoming a director of a company is that you are over 16 and have never been declared bankrupt in the past. This determines that, in reality, anybody can become a director, which is why doing a little extra digging for yourself is certainly worthwhile.

There are many businesses out there, such as Dynamic Business Information, which specialisein company credit reports, offering you the chance to find out about a company’s key financial information and payment terms, as well as gathering some vital facts about its directors. If you know what you are looking for, a director search can provide you with some valuable insight into whether the company’s overall structure, operations andmanagement make them a credible new business partner, client or supplier.

We discuss several reasons as to why running company director searches are important and the useful background information they can offer you.

Directors are the key people inside an organisation

There is, without a doubt, a link between a business and its director, or several directors, in the case of many businesses. In most situations, a director’s role is to oversee the running of the company, which means they tend to wield a significant amount of influence over the performance and operations of a business, as well as being deeply involved in the strategic planning.

If the director is the company founder, it will certainly be beneficial to you to find out some key information about them. Often, a director heavily influences an organisation’sculture and values, whilst being involved in the financial side and operations too, which means that if they are not performing well, the business could be suffering as a result.

As such, if you find something questionable during your director search, it might help you exercise due diligence before you decide to go into business with them.

A director’s history is often a good indication of their current capability

With director checks,you can quickly see a director’s appointment history – that is, the roles they have occupied in a company, past or present, and for what length of time. If they were only a director previously for a very short space of time, this might give you a good indication that they were not fit for the responsibility.

Check the companies listed against the previous directorships to try to discover what went wrong. If they were a director for companies which are now dissolved or in liquidation, this might naturally raise a red flag. If there is a long history of failing companies, it might demonstrate to you a poor management and organisationalstyle that is likely to continue into the current business you are thinking of working with.

All of these points allow you to deduce a director’s competence in running a company and whether they will be able to meet your business needs.

A director search allows you to look for trends

Finding out how long the director has been in that position within the company is also a good idea,because if you notice that there is a high turnover of people in director positions, it could demonstrate something problematic. Perhaps the directors are not seeing eye-to-eye, the business plans keep changing, or the organisationis unstable.

When carrying out your search, be sure to look for trends that could indicate what is going on. For instance, if the businesses’ credit rating dropped, they became indebted or had CCJs when a certain director joined the company, it could suggest that they are the reason behind such issues.

You can see if anything illegal has taken place or if they have been disqualified

A simple director search will allow you to see the director’s registered address and date of birth, so you may fact check these against what they have told you. Moreover, the search will show you if a director has been disqualified (or any illegal activities). Always be aware of those that have been disqualified, as it is against the law to deal with them.

Run a director search now

Carrying out a credit check and director search on a company before you decide to go into business with them is extremely important, as it allows you to gain a much deeper understanding of them and whether they would be a “risky” business partner.

Director searches provide you with up-to-date information regarding those running a company and who areresponsible for making top-level decisions, allowing you to deduce whether you should go into business with them or not.