A person cold calls and says that one of their representatives will happen to be in town tomorrow and would like to meet for free to discuss business consulting. Guy comes in and says our company could benefit from their services, but that an analyst has to spend a few hours with us to understand whether or not they can help us. The fee is $950, but we don't have to pay it if we don't like what we hear.
The very next day, a older guy comes in listens to our "story" and says we're in a shabbles with no appropriate asset protection, a poorly orchestrated balance sheet, no tax avoidance plan, no minimum profit plan and that we haven't got a clue what our business management indicators are—all to blame for our inability to get real financing.
I'm no dummy (but more gullible than I thought) so I challenged this analyst on a variety of subjects. A well-trained master of his trade, he had canned answers for my questions and quickly learned what issues were important to me and began to frame is answers to appeal to those concerns. (Not something I realized at the time, only after deliberating on it that evening.)
My partners all agreed with the analyst's analysis. Numerous verbal guarantees like "3 for 1" and such take place, but none are in the simple agreement we signed. The analyst pressed on quickly in order to close the deal, but we believed there was no real obligation unless they performed—after all, we thought, we don't have big dollars for their fees and they know this because they've seen our financial.
Speed is the calling card because it blocks due diligence—no time to do so. Next thing I know, the following day I got two guys on my doorstep who want to charge me $235.00 per hour each plus expenses and a per diem of $42 just to determine whether they can really achieve the "3 to 1" guarantee.
Fortunately, one partner got the idea that this was a scam and found several references. So that morning, I confronted the two guys outside my building, refused to allow them in the building, and said we weren't interested. The "project manager" said I was "on the hook" for 10 hours each already plus expenses and later faxed a bill for $7,050.00 to me demanding payment even though they never set foot in the door much less did even one minute of work.
These guys are slick, well-trained carpet-baggers. They prey on businesspeople who run their companies out of their checkbook. They seek to line their pockets with no real guarantees that they will perform appropriately. They say the right things either to scare you into believing you're operating with your pants down or that they can get you financed with ease. If it's all legit, then they should be just fine if you say, "I'm going to make some calls and do a little due diligence on your company before I sign. Can you provide references?" Better yet, just tell them "not interested."
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