4 Tips to Follow So Your Small Business Doesn’t Get Sued
Business and Law Features

4 Tips to Follow So Your Small Business Doesn’t Get Sued

Business owners need to limit their risks. Lawsuits can ruin a business overnight. Even if you have the financials to win the lawsuit, it's a time-consuming process that can drag on for years. If you want to avoid potential lawsuits, it's best to take a proactive approach and start limiting your risks today.

How can you protect yourself from lawsuits?

1. Work with a Good Lawyer

A major mistake that a lot of businesses make is that they don't work with a lawyer early on. When businesses are bootstrapping their way to success, the expense of a lawyer seems like too much to handle. You might even be tempted to write up your own contracts.

The problem is that one small error can lead to one massive lawsuit.

Rocket Lawyer makes it easy to get started with basic contracts, but it's also good to work with a local lawyer. You will be want to work with a lawyer that knows:

  • Local laws
  • Local customs

You'll also have a person to contact when a complex contract comes your way.

2. Pay Close Attention to Your Actions

Your actions have consequences, and if you say or do the wrong thing, you may face a lawsuit. You'll need to avoid doing the following to stay clear of the law:

  • Making public announcements that are questionable
  • Making false advertising or marketing statements
  • Conducting business that may be questionable
  • Making slanderous claims
  • Entering into any form of a conflict of interest

If your actions are illegal, you can ruin your business's reputation and find yourself in legal trouble.

Lawyers can also help to make sure that your business doesn't enter into conduct that may call attention to your actions. For example, claiming that your product can do something that it cannot might lead to false advertising claims.

All it takes is one major claim against your company to ruin your business.

Large-scale companies, such as Wells Fargo, can withstand mishaps. But if your small business is trying to make it from month-to-month, how will it survive if your brand name is ruined?

3. Insure Your Business

Your business needs insurance, and it's not something that your business can hold off on getting. The truth is that anything can happen right now that can ruin your business. Liability insurance, for example, can help your business survive a slip and fall claim.

Liability insurance protects you in the event that unforeseen accidents occur on your business's property.

But there are an array of other insurance types that can also help:

  • Directors and officer's liability insurance
  • Property insurance
  • Vehicle insurance
  • Professional liability insurance
  • Product liability insurance
  • Workers' compensation insurance

"Product liability is a defect in a product that may cause danger to consumers. Such defects may cause mild to severe injuries. A defective product may also be faulty due to inadequate instructions or warnings," states https://mainorwirth.com/.

Product liability is an insurance option that a lot of businesses fail to obtain.

But even if you're not the manufacturer, you might be named in a lawsuit. Retailers and companies that are in the supply chain can be named in product liability lawsuits.

4. Take Cybersecurity Seriously

Equifax is a prime example of why it's time to take cybersecurity seriously. The company's data breach led to 145+ million people having their data stolen. This is a major breach, but Equifax has the money to pay fines and withstand consumer backlash.

But can your business spend millions to overcome a hack of this magnitude?

You need to protect your computers and servers. Even if you don't have a customer database online, this doesn't mean that you won't be at risk. You'll want to take proactive approaches to your security:

  • Install antivirus software
  • Install malware protection
  • Update your operating system often
  • Update your software

You'll also want to make sure that any databases or computer systems have the latest security measures in place. A good option is to hire a cybersecurity company that will overlook your operations to ensure that your business's security is up to standards.

If private information does leak, this can lead to legal action from clients and suppliers.

You'll also want to have a redundant backup solution that makes multiple backups of your data. This way, even if disaster occurs, you'll still have a safe copy of all of your data available.