Most entrepreneurs go into business because they have a great idea – a product or service that they believe they can sell. The act of going into business is risky in and of itself. You’re putting your time, money, reputation, and relationships on the line. The business world is a scary place, especially when you’re the small fish in the pond. Your competitors are constantly working to out-maneuver you. Your employees, contractors, investors, customers and suppliers have expectations and problems of their own. The tax man knocks on your door loudly and frequently. There’s a maze of regulations to navigate.
Businesses that succeed tend to have sound legal and accounting advice from an early stage. If you have sound advice, and the business still fails, you’ll likely end up on more stable ground afterwards – with your personal assets, reputation, and relationships relatively intact.
Lawyers help businesses to manage risk but can come at a price tag that small business owners aren’t always ready to take on. So the most common, cheapest, and often most effective way to reduce risk is by doing business the right way.
The most common business disputes are about differences between what was promised and what was delivered, billing and payment disputes, employer-employee relationships, and on-premises injuries.
Businesses frequently deal with Consumer Protection Act, employee safety, and harassment and Human Rights Code complaints. Complying with government regulation – such as licensing, zoning, Building Code, Fire Code, access for disabled persons, anti-spam, import/export rules, and tax are also sources of friction and risk. It can be a lot to deal with.
Here are a few habits that’ll make life easier for you and reduce your legal bill in the long run.
Do your reading
There is a ton of information out there from government websites, regulatory bodies, accountant and lawyer’s blogs, insurance companies, incubators, entrepreneur groups, and industry publications. Read it all. A responsible business owner knows what laws and regulations govern their industry, and what they need to do to color between the lines. #smallbusiness #riskmanagement Click To Tweet
Put it in writing
If there’s a dispute, what actually happened doesn’t matter – only what can be proved. Written records are more convincing than memory. If you do business over the phone or face to face, keep notes and send a follow up email summarizing what was said and agreed upon. Put employee job descriptions in writing.
Having things in writing is useless if you delete it too soon. The limitation period (meaning, the amount of time someone has to bring a lawsuit) differs depending where you live. Find out what it is in your region and do the math to figure out how long to keep the records after dealing with someone. An IT nerd can burn years and years of data to DVD for you if storage space is an issue.
Sometimes the pressure to make a sale can be immense, especially in the cash-poor early days of a business. It’s hard enough to keep people happy even when you do what you say. If you over-promise and under-deliver, or take on work you’re not equipped to do, it’ll come back to bite you in the end. The rear end…
Have policies in place
You need policies, especially if you have people working for you. There are tons of free resources such as this from The Balance in the US, and this from HR professionals in Canada that can get you started. It’s wise to bounce these off your lawyer to make sure they’re current.
As your company grows, your lawyer and other advisors can help to flesh out the practices and policies in a way that suits your business.
You probably already know that there’s a lot more to entrepreneurship than meets the eye, if you’re doing it well. Getting legal advice can be a delicate balancing act as far as cost vs. benefit – especially when cash is tight in the early stages. Sometimes you need more work than you think, other times you need less. Each business’ needs will be different, and the only way to know for sure is to Ask questions. Know what you don’t know, and get an expert when you need one. I happen to know a guy….
This blog is an excerpt from a longer article titled “What does a business lawyer do?”
About the Author
Mike Hook is an entrepreneurial lawyer in downtown Toronto, Canada. He provides sound and timely legal advice to socially, environmentally, and ethically responsible small businesses, to help them focus on what they do best – their business. Mike believes that small business and the people who run them are the foundation of successful communities. Find him online at http://intrepidlaw.ca/.