Every business leader knows there is risk
Any entrepreneur or small business leader knows there is risk inherent in making business decisions, but the risks are not always about reputation, sales, or in trying out new revenue models, no, there is always a risk for any business to be threatened with a lawsuit or actually sued for anything from a customer falling inside of a retail location to a disgruntled employee. Bolt Insurance says that “small business that don’t take seriously the threat of legal action (whether internal or external) are asking for trouble,” adding that “small businesses in the United States spend more than $100 billion a year thanks to legal action.”
The company asserts that there are common lawsuits faced by small businesses that could be avoided if a business leader is informed and prepared, which is critical in an environment where 57 percent of lawsuits effect companies making less than $1 million in revenue and that one in three small business owners are sued or threatened with a lawsuit.
Small businesses spend $100 billion on legal action in America every year, and costs and claims are on the rise, with harassment claims alone rising 25 percent since 2006. The cost of settling discrimination related lawsuits every year averages $404 million, and tort liability settlements average $104 billion annually.
Bolt Insurance says there are five ways to protect your business:
- Never be surprised. Acknowledge the possibility of a lawsuit and takes steps to prevent it. Work to identify the areas of your business that are vulnerable as most lawsuits are preventable with an honest assessment of your business.
- Get everything in writing. You can’t close a deal on a handshake, it must be done in writing – painstaking as it may be. Details, such as deadlines and costs, can be fudged later if it is not in writing.
- Investigate and document it. When a client or employee has a complaint do something about it! Investigate and document the investigation. Consult with an attorney to discuss your findings and weigh the potential for settlement in a tricky situation.
- Invest now rather than paying later. The cost of legal support is not cheap, but it is better than a multimillion dollar settlement later.
- Get insured. Liability claims costs companies billions every year; liability insurance can lessen or eliminate the potential for a massive claim against your small business.
Modern lawsuit details
Learn more about common lawsuits and how to prevent them below: