8 Tips on Avoiding a Lawsuit for Small Businesses

3 min


As a small business owner, it’s your responsibility to ensure all of your business practices stay above board. However, lawsuits and litigation aren’t uncommon in the business sphere.

Up to 75% of small business owners are worried they might be targeted for inclusion in an unfair or frivolous lawsuit. This is especially the case when lawyer fees and trial costs can quickly run into tens of thousands of dollars.

This is where this article is here to help. We will explain the 8 tips on avoiding a lawsuit for small businesses. Don’t allow you and your livelihood to be put in a compromising position with litigation and unnecessary trials. Read on to find out more.

1. Keep Accurate Records

The most successful and up to date businesses will keep extensive and accurate records of any activities that are worth documenting. This might be communication between clients, phone calls, emails, transactions, purchasing, and contracts.

Make sure that any agreements are not just agreements in principle and that there is a record for any monetary exchanges or exchange of services. Your records need to be clear, accurate and describe exactly what took place.

Extensive record-keeping is good business practice and can be used as evidence if you did need to go to trial or answer to a claim against your business.

2. Write Down and Enforce Company Policies

For your business and your employees, everyone should receive a written copy of the company policies. This is so everyone can be on the same page in regards to the standard of behavior and any rules that need to be enforced.

This is vital in instructing your staff on how to appropriately behave in order to keep in line with any legal issues and also protect your company. You should follow these policies closely and fairly to make sure that everyone is aware of how to conduct themselves.

3. Keep The Promises You Make

When in business the first rule of good standards of practice is to never break your word. If you say that you are going to deliver a service or product at a certain time for a certain price, you need to honor that deal.

Never try to overpromise or exaggerate the scope of your service and deliver a substandard product that isn’t in line with your client’s expectations. This is where problems arise which leaves you open to litigation and lawsuits.

4. Provide Exceptional Customer Service

The success of your business is down to the perception of your clients and the service they receive.

If something hasn’t been up to scratch or they haven’t received the product or service they wanted, excellent customer service can make the difference between them filing a lawsuit or not.

Make sure your managers and staff are well trained in providing superior customer service and that will limit the likelihood of any impending lawsuits.

However, if the unfortunate were to happen and you were served a lawsuit, using registered agent services is the best way to ensure you receive all your official government documents.

5. Strive to be Moral and Honest

When running a business, having a strong sense of honesty, integrity, and morality should be instilled in your core principles. Having these values at the heart of your business and making decisions that will reflect them is helpful in preventing lawsuits.

This will enable you to have a reputation throughout the community as a business owner who is fair and ethically minded. This reputation is something that people will respect, knowing that morality is an important part of your business.

6. Employee and Work With the Right People

One of the most important things you can do when thinking about your business is to associate yourself with the right people. This includes employing people that you can trust and that will behave professionally and appropriately.

If you were to employ a problem employee that flouted procedures or upset customers, this is a reflection on your business. It can also leave you open to lawsuits and litigation even if you weren’t involved.

Put your faith in people that will showcase the best of your business, not the other way around.

7. Review Your Business Practices and Strategy

The world of corporate and business law is always evolving and subject to change. This is why it’s important to review your methods of working and standards of practice to ensure you are adhering to the rules.

Many business owners are surprised when they find out that their business structure or formation isn’t the best way to operate and conduct themselves. This is why yearly revisions and reviews are essential in evaluating structures and practices and changing them as required.

8. Know When to Apologise

Apologies can go a long way in defusing situations or circumstances that have the potential to escalate to a lawsuit. Sometimes you have to be the bigger person, swallow your pride and apologize to people if an incident has occurred.

Things can’t always be perfect in the world of business and mistakes do occur. If you own up to your mistakes and show how you will rectify them, this might be the difference between a lawsuit and an unfortunate mistake.

Tips on Avoiding a Lawsuit: Where Can I Find Out More?

Lawsuits and litigation with a small business can be a nightmare to have to deal with and resolve. The time, energy, and money it can take to make it go away can leave business owners feeling desperate and alone.

This is why it’s so important to protect yourself and your business from the likelihood of receiving an unfair lawsuit. We hope these 8 tips on avoiding a lawsuit have given you plenty to think about and implement.

If you enjoyed this article, why not check out our previous blog posts!

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