Small businesses have enough to do just to succeed. In this day and age, you’re no longer competing with local small businesses, but world-wide small businesses. In addition, each year brings new regulations and requirements from all levels, federal to municipal. As a firm with a dedicated business law department, we’ve put together 10 simple things you can do to keep your business running more successfully.
The last thing you want to worry about is a lawsuit. If you are a business owner, review these tips and contact us for specific advice suited to your unique situation. We do not present this as formal legal advice, but rather observations drawn from our years of experience to help you and your business succeed.
1. Keep It structured for success
Choose the business format that offers you the most protection against personal losses and financial liabilities. Keep in mind that the format can change as the business develops or your stage of life changes. A sole proprietorship may be the easiest at the onset, but it also can leave business owners open to significant legal risks. There may also be tax advantages to updating your business format. Consult your attorney to find out if an LLC or PLLC would keep your personal assets safer.
2. Keep it in writing
Put every business transaction you can into writing, especially if you have a previous relationship with the other party. Formalizing every transaction in writing protects both parties and ensures that the relationship is protected. This includes agreements, contracts, orders, and of course all financial transactions. Don’t rely on forms you find online or have AI systems generate. While these can be a good start, you must ensure the forms suit your particular business and comply with your current state laws. It’s a good practice to have your attorney review all legal documents, even order forms and invoices.
3. Keep it simple
Keep the language on your printed forms simple. Jargon and confusing legalese don’t protect your small business any better than plain English. In reality, using documents that the average person can’t understand can actually cause you more trouble in the long run. Legal verbiage has simplified since the turn of the century and excessive legalese is a sign of an older, often outdated form. If you have to consult an encyclopedia to understand your business documents, ask your attorney to simplify/update the forms.
4. Keep them informed
Make sure your key policies are easy to find and easy to read. Front-load the information to your customers and employees. This includes disclaimers and return policies, as well as others. More than ever, people value clear, concise communication in their transactions. If the information is hidden, hard to understand, or simply too long, it can be detrimental to your business reputation and create more work for you. If you want happy customers, make sure your policies are communicated clearly and consistently.
5. Keep good records
Make sure your business accounts and other records are accurate and complete. Organization starts from the top. If you know that organization is not your strength, own it and make sure that you surround yourself with organized staff, employees, or contractors. Maintaining clear and organized records will go a long way toward avoiding legal issues in the future. If, however, your business ever comes under scrutiny of legal authorities, audited by the state or the IRS, or you are questioned in court by forensic accountants, proper organization may save your business. Ask around for references, hire a good accountant and hire an independent auditor every few years. Remember, an ounce of prevention is worth a pound of cure.
6. Keep it insured
Speaking of prevention, don’t skimp on business liability insurance and don’t procrastinate. The longer you wait to apply for insurance, the harder (and more expensive) it will be to lock down a policy. Inadequate business insurance can expose your business and potentially you individually to financial risk. Remember, the goal is for your business to grow. It’s a good idea to review your coverage every year to ensure that your current policy still provides the necessary coverage. In the event that your business becomes involved in a lawsuit, insurance can protect your business so long as you have not committed any criminal actions.
7. Keep it legal
Speaking of avoiding any criminal actions, the legal landscape for business is constantly changing at all levels of government. All too often, business owners unknowingly break the law because they were unaware of a change in the local statutes or federal tax code. Ensure that you have a resource for keeping abreast of changes in this landscape. Work with a knowledgeable CPA to ensure that taxes and all other required financial and legal documents are processed on time. Set reminders for yourself to submit renewals of business licenses, annual reports, etc. on time. Leverage technology to save you and your business time and money in the short and long run.
8. Keep them happy
Your customers and employees keep your business thriving and growing. Resolve all complaints quickly, regardless of whether they come from customers, employees, or any other business complaints as quickly as possible. Make sure your customers and employees feel heard; don’t ignore them and hope they go away. Take the initiative and resolve these complaints immediately before they become a bigger issue. Get your employees on your side and on the side of the business so they feel incentivized to spot issues that create bottlenecks and stunt the growth of the company.
9. Keep it honest
Never give your customers or employees any reason to question your character. Honesty is the cornerstone of a successful business. Historically, customers and employees have ranked honesty among their most important criteria when choosing a business or employer. When your business is built on your reputation, your conduct must be honorable and above reproach.
10. Keep it legal
Remember, “Crime doesn’t pay. Honesty is the best policy.” Trust your gut, but if you are ever in doubt about the legality of a proposed course of action, consult with an experienced attorney in your particular industry. Ignorance of the law is no defense. Educate yourself regarding the legal and the ethical standards for your industry and stick to them. In the event that you are the subject of a lawsuit or complaint, you’ll be glad you didn’t cut corners for the sake of a quick buck. Rely on experienced advisors, ask for references, and hire a good business attorney.
We hope these tips help you keep your business on the path to success. Our firm offers a variety of services to businesses as they navigate the morass of legal and ethical issues with each new stage of growth. If you need more information or have questions about your particular business, contact us at Fowler St. Clair.com or 480-788-9911.