Career Testing
Career Testing
Career Testing
ENTREPRENEURSHIP / OCT. 16, 2014
version 5, draft 5

How to Protect Your Small Business From Potential Lawsuits

Creating and building a small business is a lot of work. Once your business is up and running, you will take great pride in what you have built. In order to continually grow, you need to cover all the bases. When you start a business, you think about a name, location, the product or service you’ll offer, staff, and much more.

However, there’s a whole other side to your business; the legal aspect. This will be up to you, making sure everything is in order. When everything is the way it should be in terms of legal protection, everything runs smoothly. 

Tips to Protect Your Business

Be Conscious of Your Words and Actions

As the owner, you should ensure that nothing is said or done that is legally questionable. This is not only in terms of your own personal actions, but your staffs’ actions as well. The most obvious example is watching what you say in terms of clients and customers. Any slanderous statements should not be tolerated.

You should also avoid any situations where there’s a conflict of interest. If there’s any way that a decision you make could jeopardize your business, don’t do it. Plain and simple. Think ahead before you speak or act, as your business may depend on it.

Invest in a Good Lawyer

When starting a business, you should look into potential lawyers. Some business owners interview various lawyers, selecting one that fits their needs. That way, if you need a lawyer down the road, you have one in mind.

It’s not uncommon to need advice, especially when you’re exposed to so many people and situations. There are several ways to find a good lawyer. You can scan through the phonebook, cold calling potential lawyers.

You can also follow-up on recommendations from individuals in your network. This is generally beneficial, especially if your source is someone you trust. If they have had a positive experience, you can feel confident that they’re experienced and knowledgeable.

Keep Your Business Separate From Your Personal Life

Many business owners run and operate their business as sole proprietorships. Although this is ideal for some, this can create many problems in the event that you’re sued. Accidents happen, and people sue businesses. That’s reality.

If this were to occur, the business owner risks losing their personal assets, such as their home or car. For this reason, some business owners operate under a trust. That way, if anything happens, the only assets that can generally be attacked are what’s in the trust.

Get Liability Insurance

Accidents happen, so you need to be prepared. Say you own a store and a customer falls, you may be sued. In this case, your insurance would cover any third party claims. This protects you if you’re found legally responsible for someone’s injuries or any damage to their property.

Don’t Ignore Complaints

Owning a small business means that they’ll be complaints. Ignoring complaints doesn’t mean that they’ll magically go away. In fact, you may find that small issues can potentially create larger problems, even lawsuits.

Not all cases are because someone was hurt or cheated out of money, some customers will actually sue due to mistreatment or because they were treated unprofessionally. Focus on complaints and take them seriously. Find proactive solutions, avoiding further conflict.

Your business is something that you should be proud of. Yes, legal fees can cost you a lot of money, especially if you’re starting out. However, it’s better to spend a little at the beginning, protecting yourself, to avoid spending much more time later on (especially if you’re sued).

 

Image: istock

 

 

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