How to Prevent Lawsuits as a Small Business

Lawsuits are every business’s nightmare, be it a small family shop or an international conglomerate.

And while there may come a time when you are embroiled in a lawsuit with no real fault of your own, there are certain things you can do to prevent them as well as to ensure that if one does come your way, you are standing firmly on the right side of the law.

Here is what you can do

Get the right insurance

True, insurance will not prevent a lawsuit, but it can help you go through the ordeal easier. Depending on the kind of insurance you get and the line of work you’re in, your insurance company could help you cover some of the legal fees or even some of the liabilities, if they do arise.

Make sure you do some in-depth research on the types of liability and other insurance policies that are available to you before you make your choice. Talk to several brokers before you make any decisions and make sure they understand your specific situation.

Make sure your contracts are clear

Whenever you enter into business with someone, hire someone, buy something for the business – make sure the contract that supports that action is clear and that you understand all of its provisions.

If you need to, have a lawyer on hand to examine any contracts before you use them (you can later just adjust the data for each individual client or contactor), and have your accountant look them over too.

This may seem like an unnecessary expense, but spending some money on legal advice now will be a much more prudent investment than spending it on legal representation later if you were to find yourself in court.

Needless to say, also make sure that once the contract is signed, you adhere to it completely.

Do what you can for yourself

If you and your staff are working with heavy machinery (or any kind of machinery for that matter), or need to be physically well to be able to do your jobs well, make sure you focus on the power of rest and recovery.

Even if you don’t need to be all that physical and present, try to work out shifts and responsibilities so that no one has to stay up too late or work back-to-back days and even weekends.

Sleep is a very underrated factor of our overall health, and if you are sleep deprived, all of your abilities suffer. You can cause an accident, make a mistake, or antagonize someone for no other reason than not having slept enough.

A good mattress is essential for proper rest, so invest in one for yourself, and if your budget allows it, you can even buy your team one as a Christmas present. Memorial Day is coming up and it’s actually a very good time to shop, as there are some good deals to be found.

Keep good records

When a dispute arises, it can often be difficult to determine who is right if neither side can back up their claims. This is where immaculate record-keeping can come to the rescue.

No matter how pointless, time-consuming or space-wasting you think having a great archive may be, make it company policy to keep a record of everything that you need to. What this is will mostly depend on your company and line of work. Even insignificant things, like ‘so and so lost their temper with this customer a bit, we have apologized and given them a discount’ can be a great thing to note down.

You can store your records virtually (backed up to at least two other locations as well), and you should have no problem with finding enough space for it.

Honesty is the best policy

All of us will make mistakes once in a while – and it’s perfectly natural and nothing to be ashamed of.

When this happens, the most important thing will be your reaction and how you deal with the situation. Don’t try to cover up a mistake or blame it on the customer. Admit your fault, and try to make it up to them if you can. This will not only make you a more approachable and relatable business, but it is also a great way to protect yourself from a lawsuit. Sometimes, all people need is an apology to make them more than happy to let the matter drop.

Make sure your staff implements the same practice. If they do something wrong or slip up, let them be free to admit to the fact, so that you can be aware of anything that might await you in the future.

Wrap up

Lawsuits can more often than not be prevented with some careful action on a day-to-day basis. Keep these points in mind, and your small business should be as safe from a trip to the courtroom as it can be.