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Embarking on an entrepreneurial journey can be an exciting adventure but one that can come with considerable risk. According to the latest figures, 20% of businesses fail in their first year, and only half of them continue trading beyond year five.
However, the business landscape can still be precarious to navigate even for the most successful entrepreneurs. From increasing regulatory compliance to the need to maintain a competitive advantage, the world of business requires constant vigilance and an awareness of potential risks.
One of the areas of risk that has become more prevalent in recent years relates to legal liabilities and the threat of litigation. This cost to business has steadily increased over the years, with large companies in the U.S. spending $22.8 billion on litigation in 2020.
As an entrepreneur, it’s essential to be aware of the potential legal liabilities your business can face in order to mitigate risk and safeguard your business’ reputation and long-term success. This article explores some of these risks in greater detail below.
Premises Liability
Business owners must ensure any premises they own are safely maintained for the public to avoid the risk of injury or harm. Premises liability law can hold negligent business holders responsible for compensating individuals who have been injured on their premises as a result of their failure to exercise reasonable care in maintaining safe conditions.
The following scenarios can result in a potential premises liability claim:
- Inadequate security
- Uneven floors, walkways, and stairs
- Dog attacks
- Slip and fall accidents
- Loose handrails for staircases
- Elevator or escalator malfunctions
- Falling objects
Premises liability insurance can provide business owners coverage for their legal costs in the event of a claim and typically also offers premises liability defense to contest unfair or unjustified claims.
Employment Claims
For business owners who employ staff, additional legal liabilities can also arise. Employers have a duty of care to their employees and must take reasonable steps to ensure a safe work environment.
From adequate training and safety equipment to compliance with health and safety regulations, business owners need to make the safety and well-being of their employees a priority. By investing in ongoing education and training, business owners can ensure they meet the standards required of them to reduce the risk of employment-related claims.
Product Liability
This legal doctrine holds the parties involved in the manufacture, distribution, or sale of a product liable for any injuries or damage caused. Business owners can be exposed to product liability claims in various situations such as failing to adequately warn customers about the potential risks associated with their product, manufacturing a faulty or defective product that causes injury to the consumer, or a breach of warranty when a product fails to meet a certain standard of quality.
As a business owner it’s important to note that, unlike other types of personal injury claims, the plaintiff does not need to prove the defendant was negligent making it easier for them to be successful in their claim. Business owners should, therefore, conduct thorough checks and tests to ensure the quality and safety of their products.
By implementing the advice suggested, female entrepreneurs can mitigate the legal liabilities outlined, enabling them to focus on their core competencies and long-term success.
