When you’ve successfully launched a startup business, you’re probably juggling many plates. In a typical setup with few employees, you’re likely handling the duties of CEO, marketing and sales lead, human resources and staffing, finance and planning, among others. Future risk exposure and litigation might be the last thing on your mind – but the consequences can be costly or ruinous. It’s crucial to start safeguarding your small business as early as possible with these small steps and best practices.
Small business owners often underestimate the risks, or the consequences, of facing litigation from some unknown, potential future source. And when you’ve gone the extra step of structuring your business as an LLC to afford you a certain level of protection, it can be easy to think that you’re secure.
However, the potential liability of your business tends to depend more on the nature of your assets rather than its size. Having general liability insurance is your first step towards covering various claims which may arise from the use of your products. Other specific types of insurance, such as errors and omissions, employment practices liability, or cyber insurance, may be even better suited, depending on the nature of your business.
Maintain complete records
Many industries, from financial to healthcare and the public sector, enforce strict regulations for record-keeping. Even if you’re not being pressured to comply, though, it’s a good practice to maintain complete and accurate records of your business practices, transactions, documents, meetings, and conversations.
Having such detailed and thorough records of everything you do as a business will be invaluable in defending against lawsuits. Consequently, it’s vital in this digital age to have reliable archiving software which can preserve and backup every last detail, even down to online messages and comments.
Write the book
Even if you’re currently running your small business out of your suitcase, writing a manual of procedures is a good idea. And if you manage employees, it’s essential to take the time to draft a proper employee handbook. Not only is this a great tool to spread the company culture you envision, but it can also yield benefits for your protection in the event of a lawsuit.
With the precise usage of legal language and disclaimers, an employee handbook can shield you from certain types of litigation. Consult with your attorney to formulate and review the draft. For everyone’s protection, see to it that your employees follow guidelines on workplace conduct and job performance.
Unhappy customers are never a good thing for your business, but in the realm of social media, their negative impact can spread rapidly. And you want to avoid a situation in which your upset customer escalates the issue into a lawsuit.
Work on your customer experience constantly. Make sure your staff members are well-trained to listen and communicate politely and professionally. This helps them defuse tricky situations, agree to a compromise, or even turn things around completely and make the customer happy, which improves the image of your business and minimizes the risk of facing litigation from disgruntled customers.
Prevention is better than cure, and as an entrepreneur, it’s important to understand the basics as well as the specifics of risk exposure for your small business. Start with these four simple steps and consult your lawyer for additional advice on what else you may need.