Liability awareness is the difference between the small businesses that make it and those that file bankruptcy forever.
Small business owners spend their days thinking about sales, growth, customer service, and marketing. The last thing on their mind is the billion-dollar lawsuit that can end their business overnight. But there’s one huge problem with this way of thinking…
Liability risks are everywhere, and smart business owners use this knowledge to their advantage.
Every single small company can benefit from understanding common liability risks. Here’s how to use liability awareness as a competitive advantage for any business…
What You’ll Learn:
- Small businesses bear a disproportionate amount of the cost
- Liability awareness is a competitive advantage
- The most common liability risks facing small businesses
- How to turn your small business into a liability-aware culture
- Taking action
The Small Business Owner Bears Most of The Cost… But It Doesn’t Have To Be That Way
Most small businesses don’t consider liability risks until they are involved in a lawsuit.
But here’s the problem with waiting that long to care about liability:
Small businesses are drowning in liability costs. According to recent data, American small businesses pay roughly $160 billion in commercial liability costs every year. That is not a typo. And smaller businesses pay a lot more when compared to revenue than their corporate counterparts.
How is that possible?
Large corporations have legal teams, compliance departments, and more money to absorb liability costs. Small businesses do not. When a lawsuit comes their way, it can literally bankrupt the operation.
Small businesses with less than $1 million in revenue face liability costs 7 times higher than larger businesses. When compared to revenues, that burden is astronomical.
But it doesn’t have to be that way.
Liability Awareness = Competitive Advantage
Knowledge is power, and when it comes to liability risks, the smart business owner has a giant advantage over their competition.
Whether working with pedestrian accident lawyers after a wrongful death on company property or handling an employee dispute, liability aware companies respond better.
Businesses that operate from a place of liability awareness settle lawsuits quicker and for less money. An Atlanta Personal Injury lawyer knows this all too well. That might not seem like a competitive advantage, but think about what else those savings can be used for…
Imagine what your business could do with money that would have otherwise gone to legal fees and settlements. Every dollar not spent on a lawsuit is a dollar that can be invested back into the business. Here are some competitive advantages of running a liability aware company:
- Competitive Insurance Rates
- Quicker Settlements
- Stronger Business Reputation
- Avoid Operational Slowdowns
Now that’s a powerful advantage that can help grow your small business into a large one.
Most Common Liability Risks Every Small Business Faces
Small business owners must know where liability risks can strike.
Too often companies focus on just one area and ignore the rest. But like anything in business, liability risks are everywhere. Here are the spots you absolutely cannot afford to miss.
Premises Liability
This catches new business owners the most…
If your business operates from a physical location, you will have premises liability. That means slip and fall accidents, inadequate security, and pedestrian accidents.
Recent statistics show pedestrian fatalities remain nearly 20% higher than they were in 2016. Many of these accidents occur in business areas where pedestrians walk near storefronts.
If someone is injured while on your property, or even near your property, they can sue your business. That is why adequate insurance and safety protocols are so important.
Employment Liability
Employment risks can come in many forms but are some of the most common lawsuits small businesses face.
Employment related risks can include anything from discrimination claims against your company to wrongful termination. The more your train employees on expectations and document these policies and their enforcement, the better off you’ll be.
Contractual Liability
The bulk of lawsuits between companies revolve around contracts.
Whether a supplier, client, partner, or vendor – if you don’t have a contract or something in writing, you could be in hot water. Make sure all your contracts are iron tight and properly documented.
Product Liability/Services Liability
Last but not least, every business will face some sort of product liability or service liability.
If you’re selling a physical product, you need to make sure your customers can’t hurt themselves using it. You should also have strong warnings in place should your product cause unexpected damage.
If you offer a service, there’s risk involved with that as well. Protect yourself and your business by knowing liability risks involved with your service and plan accordingly.
How To Turn Your Business Into A Liability Aware Culture
No company owner has the time to become a lawyer.
But that doesn’t mean you shouldn’t become liability aware. Below are some steps you can take to implement a liability culture within your business.
Document, Document, Document
I cannot stress this enough. If a lawsuit comes your way, documentation is your best friend.
That means keeping records of anything that could be used against you. For instance, keep records of your daily safety inspections, any customer complaints, and even employee interactions.
The more documentation you have, the better your chances are of protecting your business when something happens.
Educate Your Employees
Your employees should know liability risks involved with their individual role.
From customer interactions to proper safety protocols and how to report incidents, your team should know how to avoid liability risks when possible. Not only will this help with limiting lawsuits but run your business more efficiently.
Review Your Insurance Policy Yearly
Just because you bought an insurance policy last year doesn’t mean it will cover you this year.
Your business grows and changes every year. That means you should review your insurance policy with a professional to make sure you are covered.
Update Your Policies
Be sure your employee handbook and other policies are clear and concise.
Ambiguity only hurts you when you have to enforce these policies. Make sure they are up-to-date and can be easily understood by anyone reading them.
Hire a Lawyer, Accountant, and Insurance Professional
You don’t want to wait until you’re sued before you find these professionals.
If you have the relationships in place before a lawsuit happens, you can respond quicker and limit the damages. When working with pedestrian accident lawyers, you want someone who can advise you on preventing these incidents from happening in the first place.
Take Action
Awareness of liability risks is great, but you must take action.
There’s never a good time to get sued, but if you have to, be prepared. Start by doing a liability audit on your business. What areas of your business have the greatest liability risks?
Once you know where your business is most vulnerable, you can better protect yourself.
Start with the low hanging fruit. If there are areas of your business that you know need improvement, start there. Work with your team to improve processes.
From there, hold yearly liability audits to ensure your business is protected year-round.
Bottom Line
There will always be lawsuits.
It’s just part of doing business. But that doesn’t mean you can’t prepare for them when they come your way. Liability aware companies have a giant advantage over their competition.
Businesses that operate from a liability aware standpoint spend less money on legal fees and are able to stay open should a lawsuit occur.
Here’s a quick recap:
- Small businesses pay a disproportionate amount of liability costs
- Liability aware companies have a competitive advantage
- Common areas of liability include premises, employment, contracts, and your products/services
- Document, protect, and prepare your business for lawsuits
- Hire a lawyer, accountant, and insurance professional well before any lawsuits happen
Every dollar you save by not getting sued can be reinvested back into your company. Liability awareness will not only save you from lawsuits but help your business compete with larger companies.
