5 Costly Mistakes Which Lead To Business Lawsuits


Business owners, the aim of the game is to increase the firm’s market share. When that happens, the company can expand and double its profits. Any boss who thinks people play fair isn’t being realistic. Sadly, the main way rival businesses reach their aim is with a lawsuit. Yes, they will sue, and yes, you need to prepare. Here, then, are five mistakes to avoid as a small business owner.

Responding In Anger

Imagine a scenario where a legal professional gets in touch to discuss an impending suit. The first reaction for the majority of people is anger. Then, it isn’t uncommon to go on the defensive. Unfortunately, these emotions are not positive responses as people say things they shouldn’t. In fact, no one at the company should discuss the suit without legal representation. Never respond in anger to try and get the matter settled as it will bite you on the backside.

Not Having An Attorney

Okay, so you can call up a law firm and ask if they will represent you, for a fee of course. But, it’s far better to have a lawyer on retainer ready to strike. The reasons are two-fold. Firstly, it takes time and energy to find a legal expert who fits the criteria. By the time you agree to a deal, the case could be in court. Secondly, an attorney on retainer will try and get the case dismissed as soon as possible. As always, the best form of defense is offense.

Inadequate Coverage

The most essential document an SME owns is an insurance policy. In fact, that should read “documents” because a firm needs a variety of plans. However, many SMEs decide against insurance for small businesses due to the cost and hassle. There is a chance the money may be a waste. Hopefully, nothing untoward will happen and you won’t need the insurance company’s help. Still, it’s better to have a backup than to be vulnerable. If there is a problem, the insurance policy will come into effect and cover the costs. Therefore, there is no reason to go to court.

Sole Proprietorship

As a rule, a sole proprietorship is never a good idea. Simply put, this form of business makes you responsible for any debts or lawsuits. So, should a law firm knock on your door, they will expect you to stump up the cash. Aside from taking away valuable assets, it can obliterate your credit rating and any chances of a future. Not to generalize, but a limited company is a savvier setup. Then, there are layers.

No Data Backup

Should a lawsuit escalate, you will have your day in court. And, the judge won’t accept any other than substantial evidence. Hearsay is not admissible, which mean documents and receipts are essential. Backing up the firm’s data means you can use it as proof to win the case. A tip: store it offsite in a safe location.

If you want to avoid a lawsuit, then you have to correct the mistakes above.


About Author

Ben is a follower of Christ, a rabid computer geek, small business owner, and breaker of things. He is married way above his station in life and has three wonderful children who have made driving him insane their mission in life.

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