There is a common misconception among small businesses that they are “too small to worry about getting proper legal advice.”
However, this widely adopted assumption – that a business must be of a certain size or earn over a certain income threshold before it can justifiably invest in legal services – is perplexing.
Should size or net profit really be used as an indicator of whether or not your business requires adequate legal protection? The answer is of course no, for a number of reasons which will be explained below.
Why all businesses large and small need professional legal advice
- Net profit does not reduce your exposure to risk
Whether you are are multinational supermarket chain or a tiny corner store, your liability is the same if someone slips over in your store. Similarly, the size of your business does not automatically entitle you to preferential payment if a debtor becomes insolvent. Rather, it is the extent to which you have put in place appropriate contractual safeguards, and act in accordance with good legal advice.
The reality is, business risks must be identified and addressed at the outset of any commercial venture, large or small, to prevent potential avoidable legal issues from becoming disasters down the track.
- Small businesses have much less capacity to absorb legal misadventures
While large corporations might have a significant disposable income they can afford to spend on law suits, government penalties or pursuing significant unpaid accounts, smaller operations simply don’t have the funds, time or resources to cope. The costs and man hours consumed by a significant legal event, will often leave a small business with no option but to close its doors.
- Small businesses are at greater risk of being bullied
Small businesses are often targeted and pushed around by corporate bullies who assume small players are not aware of their legal rights and count on the fact that they are too tight to hire a lawyer. For this reason small businesses benefit from having their own legal team which knows their business and can provide ad hoc advice on small issues as they arise. They must be confident of where they stand in commercial situations and be able to flex some legal muscle when necessary.
- Owners of small businesses and start ups are often less experienced in business matters
It is sad that new business owners are often the most hesitant to get legal advice, yet they are the ones who need it the most. The range of potential risks of exposure and legal and regulatory requirements a business must comply with, no matter what its size, is considerable and well beyond the reach of the average business person. Therefore newcomers to an industry or the business world are at a significant disadvantage and prone to making costly errors if they do not obtain legal advice.
In addition, small operations have few, if any staff who can assist with paperwork associated with regulatory compliance. Having a business lawyer who can help you manage your risks and stay on top of regulatory requirements can help avoid significant penalties and legal exposure. They can also advise you on what adjustments you need to make when laws change.
Where can small businesses obtain affordable legal services?
The reality is that no business is too big or too small to warrant legal services. As intelligent business people realise, legal advice is simply another cost of conducting a business which must be factored in, much like insurance. If you can’t afford it, you definitely can’t afford not to have it.
Of course, small businesses must be conscious of costs, and they must find lawyers who are willing to work within a reasonable budget. Talk to us about how we can support your small business with legal advice and services at an affordable price.