I’m sure when you started out in business, your first thoughts weren’t, “What if I get sued?”
You were more likely excited about the prospect of fulfilling your dream, doing something that you loved. Or, possibly, how you were going to far surpass any income goals you had previously set for yourself, but as important (and exciting) as these thoughts are, preparing yourself for protection in the case of a lawsuit, is also very important.
It’s pretty common for most small businesses to not give much thought to a lawsuit until it happens, which is why I’m bringing it to your attention today. Without the right protection in place, a lawsuit can cause some serious problems for your business. Not only do they pose a financial risk, but they are stressful and unpredictable.
Take some time, read this post and then put my tips into action, so that you and your business are protected!
Protect You and Your Business Financially
Before you move too deeply into worrying about what insurance you need, you need to be sure that you are incorporated correctly. If a lawsuit is to occur, you don’t want them to be able to touch your personal finances, things like your house or car.
One of the ways you can do this is to be sure you have enough cash on hand to handle a lawsuit.
But, let’s be REAL!
How many of us have hundreds of thousands of dollars (possibly millions) laying around? In fact, many of us are bootstrapping and trying our best to keep things afloat.
Your next best option is to purchase and secure business insurance that will step in and protect you in the case of a lawsuit. Business insurance can protect you in many different circumstances. For instance, if someone slips and falls on your property, or if someone accuses you of false advertisement. In either of these cases, the insurance company will step in and handle things with the individual’s legal counsel.
Christine McDannell, a guest on Success Unfiltered, experienced a lawsuit that could have been hugely damaging to her and her business. Someone brought a personal injury claim up against her spa, Eco Chateau, for $1.2 million. When this first occurred, her lawyer immediately wanted her to file for bankruptcy, because they knew she’d be liable.
Christine stuck to her guns, knowing that she’d never in her life contemplated going bankrupt and wasn’t going to now. Thankfully her insurance company stepped in and worked tirelessly to ensure a settlement that was fair to both parties.
Without the insurance company’s assistance, Christine could have very well been out of business.
THIS is exactly why I’m stressing the need for business insurance.
In the end, the lawsuit was settled because it was partly due to the individual’s own negligence, and also the spa’s.
There were some very low points for Christine, but all in all she was able to keep it together get her business through it and into better times.
Watch What You Say and Do Around Customers and Employees
This may go without saying, but in business you must be very careful of what you say to customers. Whether it is to them personally, in your advertising, or even in your terms of service.
I’m not saying this to scare you, or to deter you from starting a business, I just want you to be fully aware of what complications can arise.
When it comes to employees (freelancers are different), if you have an employee handbook with clear policies and procedures laid out and available to them whenever they may need it, you’re pretty well protected. Be sure to address how certain situations will be handled and mostly, just be upfront and honest with them.
If you’re a good boss, your employees will want to support you no matter what.
Christine had one situation where she ran into trouble with her employees. She had one bad apple working for her and her cleaning company. The woman believed that she deserved more money, so she encouraged the rest of the staff to come together and demand a higher wage, and quit all together if she didn’t provide it.
Christine was panicked at first, but decided to break apart the pack and speak to each one individually. She quickly learned that some of the women were just going along with the “bad apple” because they felt obligated to do so. After taking each person aside, she was able to enroll some to stay because they really were happy working for her.
Those individuals who stayed were happy to remain with Christine because she respected them and spoke with them 1 on 1. Be sure to always show respect to all of your employees, in all situations.
On the customer side, be sure to avoid making any grand claims as to what your products or services can do. Those are the types of things that can come around and bite you in the butt.
A great example is when a weight loss company shares someone’s story who has lost a tremendous amount of weight with their products. In that ad, in the fine print somewhere, it will almost always say something like *results not typical*.
These companies do this to protect themselves from the possibility of any lawsuits from people who do not receive the same results.
Hire Legal Help
Don’t wait to hire legal help!
If you wait until the last minute to search out legal counsel you’ll end up regretting it. You’ll be in a rush to locate someone who is available to help you, and they may not have your best interest at heart, or align with your business model.
That’s why I FULLY recommend taking the time EARLY to find legal help that is there if you need them.
In Conclusion
Being sued is the scary side of business. It’s not fun to think about what could happen if someone were to sue you, but it’s important to protect yourself, so that if you are sued, no damage occurs to you or your company.
Take the time to run through the 3 tips (1. Protect You and Your Business Financially 2. Watch What You Say and Do Around Customers and Employees 3. Hire Legal Help), and then let me know in the comments if this post was helpful!
Get more from Christine:
- Social Media Success for Restaurants: How to Fill Your Tables and Have Customers for Life
- Successfully Depressed: Powerful Lessons For Overcoming Clinical Depression While Living A Successful Life
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