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According to research conducted by the Legal Services Board, legal problems cost small businesses a whopping £9.79 billion annually. Here are three of the most common legal issues facing small businesses today, and how to avoid them.
Intellectual Property Disputes
Many small business owners overlook the importance of protecting copyrights and patents, thinking it’s something only large businesses need to be concerned about. This is untrue. Small businesses face the same issues with copyrights and patents as any other business. In some cases, SMEs have even had their ideas ripped off by big businesses — who then took steps to obtain their own their own intellectual property protection.
Avoid intellectual property theft by finding out in advance if your business will need any copyrights, trademarks or patents. A copyright doesn’t need to be registered, and can be used to protect anything produced in physical form (such as a written document or a software application). A UK or European trademark is easy and inexpensive to register, and can help deter other businesses from ripping off your ideas. Patents are more complex and expensive to obtain, but a mere application for a patent is usually enough to protect a brand from potential copycats.
Disgruntled Employees
Employees in the UK have extensive rights with respect to health and safety, job security, childcare, and retirement. Be sure you know and understand your employees’ rights, and follow the proper process for handling any employee-related issues.
The best way to protect your business from the damage a disgruntled employee can cause is to use legally binding contracts to stipulate payment terms, employee rights and responsibilities, and termination clauses. You’ll also want to make sure you’re using contracts with any independent contractors you hire. By having the proper employee contracts in place, you limit your responsibility should any lawsuits arise.
Unhappy Customers
Customers who are dissatisfied with your products or services can cause many problems for your business. Not only can unhappy customers sink your profits by spreading bad word-of-mouth about your brand in online reviews and forums, but if they’re dissatisfied enough — and determined enough — they can file an action against your company.
Prevent potential lawsuits over unsatisfying service, faulty products or undelivered guarantees by using disclaimers with all of your products and services. This will limit your liability and place the responsibility for using your product or service on the customer. If a customer dispute arises, be proactive in addressing the complaint and avoiding any future issues. As the old adage goes, an ounce of prevention is worth a pound of cure.
