#107 3 Legal Issues Affecting Australian Businesses
In today's episode, I want to shine a light on three of the most common legal issues that I see affecting Australian business owners: risk mitigation, legal documents, and systems and processes. They might sound simple, but these are really important issues that if not addressed, can have an enormous negative impact on businesses.
The first of these legal issues is the inherent risk that comes with starting and running a business. The most effective ways to mitigate risk is through your business structure, insurance and legal documents. I’ll take you through why you need to choose the correct business structure that will suit your business, whether it’s a sole trader or a company. If you’re a sole trader, your personal assets are exposed (that includes your home and savings accounts!) so it’s absolutely vital that you consider your risk when choosing the right business structure.
Insurance is a vital part of your risk mitigation strategy because you never know what the future will bring. We've all got insurance for our cars, homes, contents, etc. but when it comes to businesses, I don’t see enough business owners making sure they’re covered and protected for whatever tomorrow brings.
Starting a business involves a significant amount of legal work and documentation, from registering the business to drafting contracts to protecting intellectual property and that brings us to our second issue - legal documents. It’s essential that small business owners have a good understanding of the legal requirements, have their legal documents in place and always seek professional legal advice when needed. If you don't have your documents drafted properly for your business, you’re leaving money on the table and you’re leaving yourself exposed every single time.
Thirdly, let's talk about systems and processes. In order for a small business to operate efficiently and effectively, you need to have well-defined systems and processes in place. These include things like accounting systems, inventory management systems, and customer relationship management systems. You should take the time to carefully evaluate your business processes and identify areas that could benefit from improved systems or automation and not using DIY legals or templates. This may involve investing in new software or hardware, legal advice and documentation, or it could simply involve refining existing processes to be more efficient.
Tune in and take a moment to reflect on these three legal issues to reduce your risk, protect your business, and create a really solid foundation for growth and success.
Full Transcript:
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[00:00:00] Hello everyone and welcome back to another episode of the Rise Up in Business podcast. Thank you for joining me again, thank you also for the feedback that I've been receiving on some of our latest episodes. I love hearing from you always, and I'm so grateful that both you take the time to listen and you take the time to reach out to share your feedback.
[00:00:38] So thank you. If you've been listening to the podcast for a while, you'll know. Very much stand for prevention being better than cure in business. And I draw from my experience as a business owner and acting for so many business owners and from acting in litigation and dispute resolution matters for.
[00:00:59] More than 12 years in the first part of my career. So I draw from all that experience when I'm sharing with you tips and tricks and information on what you can do in your business to set yourself up for long term sustainable success. In today's episode, I want to shine a light on three of the most common issues that I see affecting small business owners.
[00:01:21] Those issues need to be talked about because the reason they have such an impact is because in my experience, they're overlooked and it's either we don't know what we don't know, or we don't know where to go to action or attend to some of these issues. So the three issues I wanna talk about today.
[00:01:40] Which are the three most common issues I'm seeing affect small business owners is risk mitigation, legal documents, and systems and processes. It might sound simple, but these are mighty, mighty issues that if not attended to, can have significant negative impact on businesses. let's dive in. When I'm talking risk mitigation, what I mean by that is every small business's risk mitigation strategy comprises three things.
[00:02:08] Business structure, insurance and legal documents. That's your risk mitigation strategy. If you have got your business structure right, your insurance is in place, and your legal documents properly tailored and set up for your business, you are mitigating your risk of ending up in. Issues or financial strain down the track.
[00:02:31] And what do I mean by that? We need to make sure your business structure works for you. Too many people I'm seeing have never really thought about what business structure's gonna best suit them. And when I say business structure, I'm talking the most common business structures. Sole trader or a company, most people haven't turned their mind to what's gonna suit them long term.
[00:02:51] They dive in without thinking about it. Operator as a sole trader, which often is not the best business structure for a business, but what it means is personal assets are exposed. . So personal homes, savings accounts, those types of things, your personal assets are exposed if you're operating your business as a sole trader.
[00:03:10] And this is something that too many people aren't turning their mind to, and they're not getting it right, So that's the first pillar of the risk mitigation. The second one is insurance. I recorded an episode on the podcast not too long ago with my insurance broker that I use and that I have trust in.
[00:03:30] Laura Meyer from Meyer Insure will link to it in the show notes. I've received so much fabulous feedback from that episode because a lot of people hadn't realized the importance of speaking to a broker to get your insurance right. And what a lot of business owners were doing, were jumping online, taking out an insurance policy, thinking they're covered when they're actually not.
[00:03:51] So insurance is a vital part of your risk mitigation strategy for obvious reasons. We've all got car insurance, home and contents, all the things, but when it comes to business, not enough business owners are really understanding. The insurance needs around public liability and professional indemnity first and foremost.
[00:04:11] So we've gotta get that insurance right in our business to make sure we are mitigating our risk and we're protecting ourselves as best as we can. So they're the first two pillars of the risk mitigation strategy. And the third one is legal documents. These form such a fundamental part of your long-term sustainability, your protection, and your found.
[00:04:29] For success. Honestly, I can't talk about the importance of legal documents enough, but I need to because there's still so many people that don't realize how significant it can be if we don't get it right. So legal documents are one of the things that I mentioned as being the three issues, and they're also part of the risk mitigation strategy.
[00:04:50] So risk mitigation, legal documents, and systems and processes are the three. That I'm focusing on today and legal documents are coming up in a couple of places, so you're starting to see why they're so damn important. , let me talk about the legal documents. Your legal documents do several things for a business.
[00:05:09] So not only do they protect you legally, okay? So we're managing our expectations with our clients. We're setting out all of the important things. As service providers, what it is we're providing, what we're not providing, how we're providing it, what will be paid, how and when will be paid. What's your refund?
[00:05:30] Policy, cancellation and rescheduling. Let's talk about it. Termination. What's the deal? How can you terminate? When are you entitled to terminate? When are you not entitled to terminate? What do we do if we get into a dispute? What are our warranties? What are we promising? All of those things are captured in properly tailored legal documents for every.
[00:05:52] Small business. If you don't have them drafted properly for your business, you are leaving money on the table and you are leaving yourself exposed every single time. Like I've said so often on this podcast and I over on Instagram where I'm really active for 12 years, earlier in my career, I spent in litigation and dispute resolution, so I spent that time acting for business.
[00:06:19] owners In court either suing or being sued. And let's be honest, most of the time it was over money. But the thing is, most of what I saw back then could have been avoided if business owners had have done things differently. So if they had, have got the advice they needed, if they had have had the documentation in place, if they hadn't known how to deal with variations, if they had have known how to make sure what they'd agreed to was actually reflected in written documentation, most of what I saw could be avoided.
[00:06:49] So here I am now sharing this with you. So you can avoid a lot of those pitfalls and not end up having to call a lawyer like me later when something's gone wrong because things weren't done properly. The legal documents are the nuts and bolts of that prevention. Not only are we protecting your business for all the reasons I've just touched on, but we're also complying with your obligations.
[00:07:13] Under the Australian consumer law. So whether you are a service-based business or a product-based business, you have obligations under the Australian consumer law, and they are met by knowing how to use your legal documents properly and by having them drafted and tailored properly for your business.
[00:07:32] That's where you meet those legal obligations under the consumer law. If you don't meet them and you're not doing things properly and you don't have the proper documents set up properly, you're exposed in terms of your ability to get paid, the representations and warranties that you're making and you're exposed.
[00:07:50] Because if somebody asks for a refund, for example, you may find yourself in a position where you don't have a leg to stand on to say no, because your documents didn't comply with the consumer law. You haven't done things properly and you can't rely on them. So that little line sometimes that you see on the bottom of people's invoices that says No refunds, guess what?
[00:08:08] That's not really worth the paper it's written on. , So there's a lot to unpack there. But the point of this episode and the point of me sharing this is to say your legal documents are vital. And one of the biggest issues I'm seeing with clients at the moment is that they don't have legal documents in place or they don't have the right legal documents in place.
[00:08:28] And the third issue I wanted to share on this podcast and shine a light on is your systems and processes. Having your legal documents is one. , knowing how to use them and following through is another. So in order to be able to rely on the documents that we've got drafted properly and that are tailored for our business.
[00:08:48] So we are not using templates, we're not DIYing. You've heard me say here before. DIY is for Bunnings, not for your legals. Self-respecting business owners have no business using templates, in my opinion. We need to make sure that the documents we have in place serve our business properly, the way that they're meant to, and that we know how to use them.
[00:09:09] So your systems and processes is one area. Seeing business owners fall down because they don't know what the consumer law says about how we implement these documents. So if you are issuing proposals, for example, in your creative business, you issue a proposal to a client, you're using a CRM like Dub Sarto, you're issuing a proposal.
[00:09:28] What happens next is really important. Too many people are getting the order wrong, so too many people aren't ensuring that clients have an opportunity to read and consider their terms and conditions before they decide to buy or before they decide to engage with them. That is key. We need to get that right and once it's right and it's set up and structured properly and you've got the right legals and they're doing.
[00:09:52] Things. The systems and processes need to be set up so that everything's set up to function in the right order. We then need execution. We then need follow through. If you are not doing what you say you're going to do, you're leaving yourself exposed and people can then take an issue with you and resist payment.
[00:10:11] It happens. Trust me, too often people are resisting or refusing payment on the basis that you didn't issue the invoices when you said you would in your business documents because things weren't set up properly and you don't have checks and balances in your backend and you don't have your finger on the pulse when it comes to managing your workflow, managing your invoice.
[00:10:31] managing that client experience or that client journey from onboarding to offboarding. So there's a lot here, but these are the issues that I see as vital for long-term sustainable success for small business owners. Risk mitigation, nail it. You've gotta get it right. There's no shortcuts here. You need to get that right, to have that peace of.
[00:10:55] So that you don't get that sinking stomach feeling when a client comes to you and says, I want a refund, or worse, you haven't delivered what you promised. If I had have gone somewhere else, I'd been in a better position by now I'm suing you for damages, or I'm making a claim for damages against you.
[00:11:09] So we want that risk mitigation strategy set up properly. Second legal documents. Again, no substitute for preparation, guys, no shortcuts. Get the legal documents in place that you know are gonna work properly for your business. You only need to do it once, and then you know, you know that it's done properly.
[00:11:31] Your check-in once a year. You'll make sure everything's up to date and current. You'll make sure that any new service offerings or any price increases are all reflected in your documents. But once you get them set up properly, once you don't have to do it again. So your legal documents are vital. And the third thing is your systems and processes.
[00:11:49] You need to make sure that you're following through. You need to make sure you know how to use your legal documents, and you need to make sure that you and your team are following through consistently every time. If you nail those, Things you are setting yourself up for success, as far as I'm concerned, from a legal perspective for long-term sustainability.
[00:12:09] And that's what we're all about. And I imagine that everybody listening to this is all about building sustainable businesses. And we want long-term success, and those are the three areas that I'm seeing all too often letting business owners down. I hope you have found this helpful. If you are listening to this and you're thinking, gosh, I'm just not quite sure.
[00:12:31] If I've got that part right, please reach out. Book in for a free chat. That's what I'm here for. Let's answer the questions so you can get clarity around what it is that you've got in place, what it is you need and how to do it. And hey, if we get to the end of one of those calls and we've ticked all those boxes and you've got all the things, all the power to you, I say better to be safe than sorry, prevention's better than cures.
[00:12:54] So please don't hesitate to reach out and let's have that conversation. I hope you have found this episode. If you have business buddies that you think would benefit from this, I would be ever so grateful if you would share this episode, because that's how we get the podcast into the years of more business owners. Thanks for listening. Catch you next time.
LINKS:
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You DO need insurance, here’s why, with Laura Meyer
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