Better Business Bureau Definition

Information is one of a new business owner’s greatest assets. Customers also benefit from having access to unbiased statistics about a company’s credibility and performance. That’s where the Better Business Bureau (BBB) comes in; this national nonprofit organization provides the public with the information they need to evaluate businesses. This guide explains what the BBB is, the benefits and drawbacks of joining the BBB, and more.

What is the Better Business Bureau?

Dictionary.com’s definition of the “Better Business Bureau is “any of a nationwide system of local organizations, supported by business, whose function is to receive and investigate customer complaints of dishonest business practices.” However, this definition of the Better Business Bureau fails to mention that the organization, started in 1912, is both private and nonprofit. 

Plus, there are over 100 branches of the BBB within the United States. Collectively, these branches work to rate businesses for the benefit of customers and businesses alike. Today, almost 400,000 North American businesses have received accreditation from the BBB, and the BBB has created profiles for over 6.3 million businesses.

How does the Better Business Bureau rate businesses?

The Better Business Bureau uses a simple grading system to evaluate businesses. Business grades range from A+ to F. Understandably, A+ is the best grade, and F is the worst. There are seven specific elements that go into the BBB’s final grade rating. 

• Complaint history. Several factors play into this element, like the number of complaints against the company and the size of the business. 
• Business type. The BBB may provide a low rating of this element if a business “raises marketplace concerns” or violates the law. 
• Failure to honor commitments. Companies receive a lower rating if they refuse to honor commitments like mediation settlements and arbitration awards.
• Time in business. The longer a company has been active, the more positive the rating for this element.  
• Advertising problems. Companies that misuse the BBB’s name or falsely claim to have BBB accreditation will have a poor score here. Businesses making false or misleading advertising claims will experience a negative impact on their rating.
• Transparent business practices. For this element, the BBB examines whether businesses are forthcoming about their contact information. False or incomplete contact information will obviously reduce the business’s rating. 
• Licensing and regulatory history. Every commercial legal entity (including limited liability companies and corporations) needs licensing. If a business fails to obtain necessary licensing or loses it for misconduct, the BBB will lower its rating.

Each one of these elements affects a final point system. Positive factors add points and negative signs reduce points. The final point tally is graded along a scale of 0-100 and assigned a letter rating.  

Better Business Bureau Membership Advantages and Disadvantages

Many business owners should consider joining the Better Business Bureau. Yet there are both benefits and drawbacks to BBB membership. BBB membership can help improve a company’s reputation and standing among consumers. But Better Business Bureau membership has disadvantages, including a monthly cost of $30-$500. Small and new businesses may not be able to justify this cost. 

Summary

The Better Business Bureau is a nonprofit organization committed to rating the transparency and behavior of businesses. 

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ZenBusiness Can Help

It’s prudent for a business to do everything it can to get the best BBB rating possible. ZenBusiness can help businesses improve their BBB score with a variety of services. Their Business Formation Services help a company get started on the right foot, and their business license report simplifies the process of getting required licenses. The brand’s Worry-Free Compliance Service even helps streamline the process of complying with annual requirements like filing annual reports, helping keep a brand’s BBB score on the higher side.