All business owners would prefer to avoid lawsuits and other legal trouble for their company. The good news is that there are proactive steps that you can take to lower your business’s risk and liability. While there are several ways that you can do this, a general rule is to make sure that common sense is used and that there are strategies in place to ensure that your customers and employees are protected.
Limit Your Exposure with Insurance
You can get various types of business insurance policies that are designed to meet a range of different needs. Some of the most common business insurance options include:
- Professional Liability Insurance: This protects your business against a lawsuit that is specific to your profession. For example, it might cover lawyers or medical professionals against malpractice claims.
- General Liability Insurance: General or commercial liability insurance will cover your business for claims for things like negligence, injuries, or accidents.
- Home-Based Business Insurance: If you are running your business from home, a regular home insurance policy is unlikely to cover any business-related problems. You may be able to add this on to your homeowner’s insurance policy, or the better option may be to get a separate policy to cover your business, especially if you have customers or employees at the property.
- Product Liability Insurance: This is designed to protect your business against lawsuit losses due to defective or harmful products.
- Commercial Property Insurance: This insurance policy is designed to cover any damage or losses to your company properties such as offices or warehouses.
Structure Your Business Correctly
When starting your business, how you are going to structure it will be a major decision when it comes to limiting liability. For example, structuring the business as a limited liability company will provide you with more protection compared to running your business as a sole proprietorship. This is because when your LLC is sued, the lawsuit can only come after your business assets rather than both your business and personal assets, along with other protections. Another option is to structure your company as a corporation. It might be worth speaking to a legal professional to get further advice on the best way to structure your business.
Keep Employees and Customers Healthy
Many people think of accidents when they consider reasons why a lawsuit might be brought against their business, but the truth is that people getting sick could also be a liability for your company. While some illnesses like colds and flus might not be completely preventable at times, there are a lot of things that your business can do to keep everybody as healthy as possible and control outbreaks. Make sure that you have strict sanitization and cleaning procedures in place and that any food is stored correctly.
Regularly Identify Risks
While it is impossible to completely avoid any and all risks in the workplace, you can reduce hazards to both customers and employees by regularly looking out for risks and coming up with strategies to deal with them. This could involve walking through the premises on a regular basis to find trip hazards or conducting weekly safety audits, for example. The best approach is to ensure that everybody who works for your business is on board with searching for, identifying, and reporting risks so that any dangers can be dealt with swiftly and effectively. In the event of a lawsuit, being able to prove that your business has taken reasonable action to ensure safety will go in your favor.
Communicate Clearly
While you might think that it’s obvious that something in your business might be dangerous or risky, it’s important to understand that not everybody will perceive it to be, and this is how accidents can happen. It’s important to make sure that there are warning signs for any potential risks in your workplace to make sure that customers and employees know how they can keep themselves safe. Even if it’s seems fairly obvious to you, it’s important to remember that not everybody is going to be aware of the risks as much as you are, and may mistakenly assume that something is safe when it is not.
Work with Good Legal Professionals
It is a good idea to hire competent lawyers who can defend your business if needed and provide you with tailored advice when it comes to reducing liabilities and protecting your business from risks and hazards. A good business lawyer is always good to have even if there are no lawsuits being brought against your company at the moment. You may also want to be prepared for any situation that may require a defense team for your business. Litigators, contract lawyers, and even personal injury lawyers may all be good contacts for your business to have.
Check for Accuracy
It is important that anything that is put into writing by anybody in your business is accurate. This includes contracts you sign, marketing statements, and even posts on your company’s social media profiles. According to SharkTankBlog, there is a risk of a lawsuit being brought against your business the moment you promise something that you are unable to deliver, even if the promise was an error at the time. Because of this, it’s best to take some additional time to ensure that anything in writing is double- and triple-checked; avoid rushing and consider having a lawyer look at every public statement you plan to make first.
Quality Testing
Finally, if you sell physical products through your business then a solid quality assurance process will help you reduce liability and the risk of lawsuits. Prevent liabilities in the first place with a thorough testing process, while asking for and getting feedback from customers to see if there are any ways that you can improve the process and ensure that all products you send to market are high-quality and safe to use.
When running any kind of business, there is always the risk of lawsuits. Thankfully, these are several things that you can do to reduce liability and protect your business from legal trouble.
