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10 Reasons Small Business Background Checks are Essential

Date Published: March 24, 2022 | Last Updated:September 15, 2023 | By Accurate Background
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What is one reason why a small business owner should consider conducting background checks?

To help you determine whether or not to conduct background checks on new hires, we asked hiring managers and experienced small business owners this question for their best insights. From verifying employment & education history to maintaining client trust, there are several points that may help you decide whether or not background checks are worth it for your business.

Here are 11 reasons why small business background checks are essential:

  • Verify Employment & Education History
  • Ensure They Aren’t a Security Threat
  • Make Sure You’re Hiring the Ideal Candidate
  • Protect Your Small Business
  • Protect Your Business’s Reputation
  • Keep Investors Assured
  • Filter Out Unreliable Job Candidates
  • Ensure You Are Making An Informed Hiring Decision
  • Avoid Expensive Rehiring
  • Maintain Client Trust

Verify Employment & Education History

Small business owners should protect their own interests, time, and money by verifying a candidate’s employment and education history to ensure that there are no discrepancies between their resume and the truth. While chances are high that a candidate is representing themselves honestly, it’s not unheard of for people to lie, and for small business owners, it’s far better to be safe than sorry. The last thing you want is to hire a new employee who can’t fulfill the necessary duties of a job, especially in cases where workplace safety depends on a high level of expertise. A background check can reduce the risk of liability and confirm that a new hire is a solid investment.

Stephen Light, Nolah Mattress

Ensure They Aren’t a Security Threat

Every business should conduct background checks. A certain level of trust must be established between employer and employee at the beginning of their relationship. When we are hiring, we must make certain that any candidates have no history of black hat shenanigans. Otherwise we run the risk of diminishing our reputation, and authority. We can’t hire someone who has been convicted of bank fraud and could use their knowledge of new security systems maliciously. However, we should not discount a person because they made a mistake in the past. We are all capable of changing, and we have all made bad decisions at some point. Small businesses should trust their gut with these candidates.

Eric Florence, Security Tech

Make Sure You’re Hiring the Ideal Candidate

When you’re going through the screening process, it’s important to look for any signs that something may not be “quite right.” The current business environment has created a situation where employee retention is very low, so hiring the ideal employees is more important than ever. If a candidate doesn’t like the idea of a background check, then they may not offer the solution to your hiring needs. Instead, look for candidates who are transparent and don’t mind sharing their experiences and background histories.

Lauren Kleinman, The Quality Edit

Protect Your Small Business

The SG&A to revenue ratio of a small business is more sensitive to the addition of one person as opposed to a large enterprise. But over and above that small businesses are a lot more sensitive to fraud, theft, mismanagement of funds, or even blatant misconduct. Having a thorough check on an employee will greatly reduce these risks. I actually believe a small business needs to conduct background checks more stringently than a large enterprise with pre-established internal policies and by-laws.

Mogale Modisane, ToolsGaloreHQ.com

Ensure a Safe Work Environment

Background checks are essential for making informed hiring decisions. Thorough background checks increase your odds of hiring the most qualified candidates, and minimize fears — as well as potential risk — related to any threats that an employee may pose. Using a pre-employment background screening platform also keeps you compliant with federal, state, local, and industry regulations, which helps to protect your organization against liability claims.

Protect Your Business’s Reputation

If you want to protect your business’s reputation, you should be conducting background checks when hiring someone new. If you hire someone without performing a background check, you may be bringing someone into your business who could potentially cause a lot of damage. You need to look into what their work history and criminal record looks like, if they have one. It may reveal some red flags you wouldn’t know about otherwise.

Rachel Roff, Urban Skin Rx

Keep Investors Assured

Running a proper pre-employment screening or background investment is essential for small businesses to assure their investors of security and stability in the company. Providing investors a background check report on a candidate will ease any issues they might have on the possibility of a bad hire because this could jeopardize how they feel about the company. Keeping investors assured is crucial for any small business to thrive, so it is important to always conduct a thorough background investigation on each candidate during the hiring process.

Brogan Renshaw, Modelers Central

Filter Out Unreliable Job Candidates

Doing background checks is necessary to filter job candidates and ensure that the business hires the most fitting and credible ones. It verifies potential employees’ qualifications and helps leaders decide the right people for the position with finality.

Let’s say you have encountered a persuasive job candidate with an impressive CV. A background screening may confirm if he or she has the proper attitude and social behavior to represent your organization moving forward. Employers should keep in mind, though, to exercise great care in collecting and handling personal information they need without violating applicants’ privacy. Always refer to and comply with the Fair Credit and Reporting Act when screening job applicants with a third party organization.

Abe Breuer, VIP To Go

Ensure You Are Making An Informed Hiring Decision

Prospective employees who are looking to avoid background checks are more likely to apply to small businesses. The common understanding among many applicants is that big corporations, with larger HR budgets, maintain background checks as part of their protocol, so those with checkered pasts apply to smaller businesses as a result.

While not everyone who’s made mistakes in their past should be prevented from finding work–in fact, some need a business to give them a chance–the fact remains that information is king when making good hires. It can be a costly investment, but background checks are certainly worth it. As singular employees make up a larger percentage of a total work output, small businesses are often more vulnerable than large corporations to the bad effects of not running a background check.

Dan Bladen, Kadence

Avoid Expensive Rehiring

Every small business owner knows how costly it can be to attract, hire, and onboard a new employee, and small business budgets are often tight to begin with. Conducting background checks can help ensure that small business owners are confident in a new hire, and can help avoid any unfortunate surprises in future that might result in the hassle of firing and rehiring. Many pass over background checks because of the expense, but the cost could be much greater down the line if something is missed. Background checks are about building trust, and can mitigate the potential for unexpected expenses, too many of which can be devastating to small businesses.

Nick Drewe, Wethrift

Maintain Client Trust

The hiring process is one of the most expensive processes that most businesses will do. From recruiting new talent, to interviewing, setting up benefits and onboarding, it’s labor intensive and expensive. Often, doing background checks seems like an unnecessary step that can hold up the process. Most of the time, background checks rarely come back with anything that would prevent a company from hiring a job candidate. However, the first time something does come back, most companies are happy that they did.

When clients work with a business, they assume that the company is going to try and limit their exposure to risk. Companies often have privileged client information, including billing details or health information. It’s imperative that companies protect that information by making sure they hire trustworthy candidates who don’t have a history of taking advantage of their privileged status in a company. Having a background check process ensures that your customers are always safe.

Kyle Risley, Lift Vault

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