Guilty! This Is How Businesses Wind Up With Expensive Lawsuits

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Legal issues are often the last thing on entrepreneurs’ minds when they first start a business. They assume that the people they work with are reasonable and that even if there is a risk that they will be negligent, the chances are so small that it’s not worth worrying about.

 

But here’s the problem. Making legal mistakes can actually undermine the entire company, thanks to the fact that they tend to have a very damaging effect on reputation and your bottom line. Here are some of the legal mistakes that entrepreneurs often make, and what to do about them.

 

No Human Resources Guidelines

 

Small companies often get into trouble because they don’t have any HR guidelines that set out the conduct the company expects of its team. Without a proper code of conduct, it’s harder to make a clean break with employees who do a bad job. Many companies wind up going bankrupt thanks to lawsuits from former members of staff who successfully claim that their dismissal was unfair, an argument that is much easier to make if there are no established behavioural policies and procedures. Top tip: go to a professional human resources expert and get them to formulate a bunch of policies for your business, including a code of conduct, as well as a bunch of disciplinary procedures.

 

Failing To Observe Machinery Regulations

 

PUWER regulations were established to make sure that the machinery companies use is safe. But many companies continue to operate machinery that is dangerous, despite the fact that doing so could end up with them having to pay hefty fines. Pro top: hold regular audits of all your machinery to make sure that it adheres to regulation standards, and keep a paper trail of evidence that says that you have been diligent about the safety of your machinery.

 

Talking Trash About The Competition

 

Nobody likes their competition, especially when you think that you’ve got a much better product. But slamming your competitors publicly, or even anonymously over the internet, can have massive repercussions. A rival business could take you to court over libel and sue, resulting in your business having to pay out thousands, perhaps millions, of pounds.

 

Some advice? Don’t talk about what other firms are doing in a derogatory way and only refer to them generically as “the competition” if you do want to question their business practices.

 

Failing To Get A Patent Or Copyright

 

If you’ve just started up a business, there’s every chance that you’ve got some fantastic intellectual property that’s allowing you to offer customers something entirely new. As a result, you want to protect it, either by copyright or by patent. Unfortunately, many entrepreneurs don’t protect their products and, as a result, end up going out of business because they can no longer get funding from venture capitalists. It’s a good idea, therefore, to chat to a lawyer and build an inventory of your company’s intellectual property. Doing this will make it clear what needs to be patented and what steps you need to take next.

Beth Mahoney

Hi! I'm Beth Mahoney, a beauty and lifestyle blogger from Honiton in Devon.

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