4 Things You Can Do to Protect Your Small Business From Potential Lawsuits
[This article was written by Anita Ginsburg.]
Small businesses are particularly vulnerable to legal constraints because they often lack the resources for adequate protection. Due to their size, smaller companies may be more easily targeted by hackers and thieves, leaving them exposed to litigation due to issues like data breaches and delayed orders. Here are four ways to protect your small business from possible legal claims.
Keep Accurate Records
To protect your business and your clients, you must keep up-to-date, accurate records. Documents pertaining to suppliers, products, services, and operations should be carefully managed and stored for ready access if needed. When a lawsuit is filed, a company’s documents will be required as evidence to support the business or prosecute a defendant. Double-check inventory reports and fulfillment lists to ensure everything is correct. You may want to maintain both print and digital records as well as duplicates of all important documents.
Small companies need insurance coverage as much as larger ones. Liability insurance is designed specifically to protect you if you are sued by another party. You will likely need coverage for many aspects of your business, including equipment, products, records, and other resources. A protective insurance policy will probably not cost that much but will be very helpful if a problem occurs down the road due to technology, equipment failure, or human error.
Implement Protective Security
In addition to having an insurance policy that will compensate for a business loss, several types of security should be implemented to prevent losses of various kinds. Your physical premises can be secured through locks and alarms on the windows and doors. The company’s Web resources should be protected with firewalls and antivirus apps. Client confidentiality agreements and nondisclosure documents add a level of security that protects all involved parties.
Follow Ethical Principles
It may be tempting to take shortcuts because smaller companies can sometimes fly under the radar. Doing business with friends or local community members might establish a relaxed relationship leading to skipping rules or exchanging favors. Always follow the rules that apply to your standards of doing business to ensure fairness for all. Don’t discriminate against certain groups of people or give preference to others. Apply discipline and give rewards equitably. In addition to simply being good practices, these principles help you avoid legal problems later.
Business law applies evenly to companies of every size. Make sure your business complies with local and federal laws and utilizes adequate security to avoid lawsuits from disgruntled employees or customers.
Anita is a freelance writer from Denver, CO. She studied at Colorado State University, and now writes articles about health, business, family and finance. A mother of two, she enjoys traveling with her family whenever she isn’t writing. You can follow her on Twitter @anitaginsburg.