This episode of The Business Bites with Rachel Brenke is going to be a little bit more of a legal talking-to because I entered my office, fired up my computer with my coffee in my hand, and I found multiple emails from people who’ve all had issues in their business. All these sole entrepreneurs or self-employed that end up having issues that they could’ve remedied had they put major supports in place. I just wanted to give you guys a quick framework for how you guys can prevent issues because cleanup on Aisle 4 can be extremely expensive, a complete time suck, an energy suck. You’ll be spending your “off hours” focused on trying to put out fires or fix legal issues when you could have prevented them from the very beginning. I’m going to go over the major support for you guys, nice little checklist for you to take and use.
The first one is communication to set expectations and resolve miscommunications. Any time that you are interacting with your potential customer or client, you need to have as much communication as possible and as much information. This is balanced. You don’t want to give too much information, but you need to tell them the key information.
If you are in more of a personal-services-type of business such as, let’s say, like a photographer, and you’re offering portrait photography services, you’re going to want to be able to set the expectations with your clients through the use of things like contracts in order for you to be able to be on the same page as your clients. Things such as when you should get paid, how you’re going to get paid, when the client’s going to receive their photos, walking them through and setting expectations of how the entire session’s going to go from the second they come to you. You can look and see what kind of communication tools are available to you to be able to set expectations.
One of my recommendations is try to keep all key information that you want your customer or client to know in relatively one place. I’m not a big fan of sites that have a little bit over here, a little bit over there. Try to condense as much as possible. Again, balance it with the fact that you don’t want too much information. For example, on an e-commerce site, you’re probably not going to shove all your entire terms into the product description of the product. What you’ll want to do in that sense is to have your product listing, have the product description, and then you could probably have a tab that includes your website terms, and then perhaps in the footer or then at checkout, it also refers to that, but it links to a different page. You don’t necessarily have to have all that legalize text jammed into there. It’s really, to me, that is putting most of your terms relatively in one place that are easy to find.
I feel like the same thing with photography is that you can have like a Frequently Asked Questions page or as much information on your site, and you could refer to the contracts. You don’t have to shove it all together and necessarily put your contract publicly. That’s going to be something when the client gets into you, but you want to give enough of the important information up front. Then when they do get to you, you’re going to be combining all of that information together relatively in one place.
The next thing is you want to be proactive. That’s why really the sentiment of this entire episode is you need to be proactive to extinguish a fire. Inactivity can throw gas on the fire. What I mean by this is oftentimes when there’s an issue with a customer or a client, business owners who are not necessarily, and I don’t mean this in a derogatory manner, but they’re not very mature in the sense that they haven’t been doing this very long or there’s a lot they still don’t know. They allow fear to paralyze them, especially when they don’t know how to respond to a customer issue, so they just won’t do anything at all.
I get that. From a legal standpoint, as a lawyer, sometimes, it’s best for you not to say anything and then to hand it off to a lawyer to take care of it if it reaches that point, which I hope it doesn’t for you guys. I find that being proactive, if you realize you screwed up an order, to go ahead and tell the customer, “Hey, we realize we screwed up the order, but here’s how we’re gonna fix it for you.” Don’t wait for them to find out and then be upset. The more actions that have a negative impact, the more it tears down their confidence in you and less likely they’re going to refer you.
That can be done an e-commerce. Say you accidentally send the wrong color of shirt. You end up finding out later. Don’t wait until that customer opens up that package. You can send him an email and say, “Hey, this is what’s going on.” Then your business policies, you can end up linking in that communication to say either you can send the shirt bank and we’ll send you a pre-paid label or you can keep the shirt and we’re going to send you the one in the right color.
By being proactive, you’re going to be offering customer service and avoiding any potential issues because say that you just send that wrong color shirt. You don’t say anything. They end up getting it, and they end up initiating communications with you, and you just kind of sit on it because you don’t know what to say. They can end up starting getting antsy as a buyer and start opening up disputes with PayPal or charge backs with their credit card. Once you go down that hole, that is a way hole to fall into. It’s not any fun. A lot of times, I find that charge backs in businesses could’ve been avoided.
I actually talk about money charge backs and the impact they have on small businesses in Episode 11. So far, we’ve gone over communication to set expectations, being proactive, and of course I’m going to throw in here the business formation protection, which I’ve talked about in previous episodes.
Definitely make sure that you are separating out your personal assets from your business assets as much as you can. This is one of those aspects of business that I think you can make a good research into understanding the business formation options: sole proprietor, LLC, incorporation. Definitely look at having a small business attorney and/or a CPA assist you in making the final determination. They can look at your specific circumstances, what type of business you are, etc. I talk about when to actually get a small business attorney in Episode 16. I also identify some things in there when I feel like you as business owners don’t necessarily need an attorney and you’re able to do things on your own. Business formation is one of those because I feel like in this day and age when people are not hesitant to initiate legal action. Say your communication fell apart. You are proactive, but the client is still isn’t listening, and they end up initiating into legal action. Your business formation’s going to help protect you.
One of the things that I always tell people is you kind of have a protection trinity, if you will. We’ve got the business formation. We had liability insurance, and that depends on obviously what you’re offering or providing. Then your contracts, which is essentially the communications that we talked about a little bit ago at the top.
I also want to note in here, though, is that we want to have contracts whenever we have some type of services that requires contracts. I know you probably wouldn’t necessarily have a “contract” on an e-commerce site, but that is actually going to cross over to the website terms because that’s an legal agreement as well. Definitely have, if you can, the business formation protections so your personal assets are separated out, but also try to have a contract to establish your relationship, you outlined your expectations like we talked about a little bit ago.
Also to identify a resolution method. I think this is really important, especially if you’re offering more personalized services. You might be a business coach or photography services, whatever it may be. There’s a whole plethora. You’d be here all day if I listed them all. Having a resolution method within the confines of that contract also helps to manage not just the costs and time and energy into resolving a matter, but it makes it cleaner and easier because you know exactly what’s going to happen. The client knows what they can initiate or what you can initiate if you need to resolve a manner.
I don’t teach legal protection layers for nothing. My gain is actually super-minimal from this teaching. Besides the fact that I do help with business formation stuff, I don’t make anything on insurance. I don’t make anything by telling you guys to be proactive. My entire goal with all of this type of tips is to make sure that you guys are focused on preventing issues up front and getting all of that in place so that if there should be an issue, you are more insulated from liability as much as possible. I really don’t want all your hard work as a small business owner to be in vain, so please, please set these things into your budget and plan.
I’m going to get on a little rant here. Stop buying the [QC 00:09:54] stuff for flat lays, over investing in protections. Stop messing around and thinking you’re going to get to this. Stop dropping $5 a big name coffee joint for the sake of an Instagram photo when you could’ve saved that to help support your business. Stop putting these non-priority items over prevention and protection tools. As a business owner, I am not a fan of litigation. It sucks the life, time, money, and energy out of you. Even if you never get to court, the mere action of having an upset client or customer or receiving letters from their lawyer or having to go through a resolution process can kill your business. I’ll even be as dramatic as to say it can kill your soul. It can suck the life out of you or at least it can feel that way.
How do I know this? Because I’ve seen it first-hand. I’ve seen it happen to business owners who were stuck dealing with the junk that could’ve prevented all the things we just talked about, but they didn’t set up the measures in place to make sure that they were protected.
I encourage you guys to go through this nice little checklist and try to stick it into your budget to invest in. I actually talk in Episode 14 a bit about six budget areas that small business owners forget to include, so cross over to that and also I give tips in that episode of how to plan and save so you can do all of these protection measures that I just talked about.
Guys, please, please, please, please stop with the coffee cups and the flat lays unless you know that you have everything together because I am so saddened seeing businesses stumble underneath the weight of having issues of things that could’ve prevented from the very beginning.
Rachel Brenke is a lawyer, author and business consultant. She is currently helping professionals all over the world initiate, strategize and implement strategic business and marketing plans through various mediums of consulting resources and legal direction.