Unfortunately we don't always know. But if we do our homework ahead of time we can lessen our chances of having problems.
Now I am not sure what type of business you are referring to, but these are a few things we can do to check a business out.
Get personal references from friends, family and others that may have done business with the one you are considering using.
Check with the Better Business Bureau and see if or how many complaints have been filed against said business and if the complaints have been resolved.
Contact the local Chamber of Commerce and do the same.
If purchasing a big ticket item, do your research again and comparison shop. Try to always compare apples to apples, this will help ensure that you really are getting the best deal.
If it is an online business opportunity do the same as above with the BBB an C of C. You can also check them out on any of the numerous scam alert websites available.
Thinking of taking on a business partner? Do the same as above but also do a complete background check, credit, business references, resume and criminal.
Now days you can also use google, yahoo or any search engine and often find out more about a business or person also.
Hope this has answered your questions and given you a starting point.
Good luck and best wishes.