4 tips for preventing lawsuits against your small business

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By Lizzie Weakley

Small business owners have to worry about all kinds of things. They need to please customers, deal with suppliers, perform marketing on a meager budget, manage employees and much more. However, all of that effort can be wiped out in an instant by a lawsuit. Sadly, lawsuits are all too common in our very litigious society. If you want to survive as a small business owner, you must take steps to prevent an unforeseen lawsuit from destroying your company. Hopefully you won’t need to lean on those precautions. However, they can help you avoid the worst. Here are a few tips that can help save your business from disaster.

Make safety and ethics a priority

A lot of the time, lawsuits result from bad company culture. Even as a small business, you should be aware that your company does have a culture. If you don’t make safety and ethical behavior a priority in your company, your employees can start acting reckless as a result. That will ultimately result in the kind of irresponsible behavior that produce lawsuits. Overall, try to enforce safety and ethics at all levels of your business including employee training programs.

Get insurance coverage

Sadly, despite your own massive efforts, it can sometimes be impossible to foresee what will result in a lawsuit. While you can lower the odds of one occurring, it’s impossible to remove the risk entirely. Thankfully, you can take steps to prevent your company from going out of business if you do get sued. The way to do this is through professional liability insurance. Paying the premiums will give you the coverage you need to weather the storm of a lawsuit.

Write company policies and enforce them

To avoid losing a lawsuit, you need to have company policies in writing that all employees are made aware of. Furthermore, these policies must actually be enforced. If you don’t actually follow your own rules, you could be found negligent in court. Make sure you also create paper trails that demonstrate your enforcement methods. Doing so can help keep you out of trouble since you’ll have the receipts to prove your company’s innocence.

Consult with legal professionals

As a small business owner, you have to be a jack of all trades. Still, you can’t know everything. You must sometimes take advantage of the knowledge and skills of experts. This is certainly true in regard to the legal aspect of your business. Work with a lawyer regarding contracts, developing company policies, safety standards and other legally tricky components of your business.

One of the biggest threats to any small business is the possibility of getting entangled in a lawsuit. Even the legal fees can be much more than most small businesses can withstand. Overall, you need to be proactive regarding preventing lawsuits as well as shielding your company from the possible financial fallout of becoming embroiled in litigation. It’s an important way to help ensure your business’s survival. By making sure you run an ethical business and consulting with legal professionals, you will avoid most circumstances that make lawsuits possible.


Lizzie Weakley is a freelance writer from Columbus, Ohio. In her free time, she enjoys the outdoors and walks in the park with her husky, Snowball.

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