Some businesses are born of the heart, others by chance. If you’re lucky, you’re entering an industry that’s seeing great interest rates, a surplus of starting capital, and investors that are willing to take a chance. These lower barriers to entry are exciting, and they can help small and medium-sized businesses hit a nice stride right out of the gate. If you’re entering a more difficult industry, you’re squeezing your pockets from the jump.
Either way, the one thing guaranteed to throw a monkeywrench into the forward progress of your new business is a costly lawsuit. Sometimes the unexpected can’t be avoided, but it’s important to be prepared – be compliant, be insured and protect yourself as much as possible from the outset.
Small business owners often go into business with personal friends, family members or long-time work colleagues thinking that their future business dealings will be all smooth sailing. That, unfortunately, isn’t always the case and when you start raking in huge profits, memories tend to get fuzzy.
Partnerships agreements that establish how much each owner has in the company (percentage of ownership) and whether the allocation of profits and losses will be proportional to that percentage of ownership is critical to establish upfront.
Partnership agreements can also come in handy when it comes to establishing decision-making power, conflict resolution processes and how you’re to proceed if a business partner wants to leave the company.
Limited liability companies (LLCs) might also want to consider operating agreements to establish a few ground rules for running the small business. Laying out management and default rules, voting rights and buyout rules is what operating agreements are all about.
If you’re a small business working within the design or media industry, then hiring a lawyer to file copyright protection and trademarks on your behalf can save you a lot of time and expense while buffering your company against future legal troubles.
Employment agreements that are smart and well thought-out will help pre-empt many issues that might otherwise arise with employees. However, it is important to remember that our local, state and federal labor and employment laws are constantly changing. Even if you have only a few employees, it is important to stay up-to-date and compliant on all labor concerns.
When facing a dispute with an employee, most companies want to do all that they can to sidestep the cost of the courtroom. This is why Alternative Dispute Resolution (“ADR”) has become so popular. Arbitration and mediation are practical, cost-effect solutions to quickly remedy issues, allowing companies to leverage control over the situation, all while saving time, money and preserving relationships.
This kind of insurance can help buffer a wide variety of claims that clients or your own employees might throw your way. General liability insurance protects against things like personal injury, property damage and even claims of bodily injury brought against your small business.
Liability insurance will often cover medical expenses, your attorney fees, and any damages that you might otherwise be compelled to pay out-of-pocket without coverage.
Contact me today at (404) 919-1957 for more advice on avoiding lawsuits in all aspects of your business.