Why SMEs Need Legal Support to Manage Risks Effectively
For small and medium-sized enterprises, managing risks is crucial to long-term success. Yet as you may have to wear many hats when running your business, the importance of legal support may sometimes be overlooked, exposing you to contract disputes, regulatory fines, and governance issues. Here’s why legal assistance is critical for SMEs and MMEs.
Contract pitfalls to avoid
Contracts form the foundation of most business dealings, but common errors can lead to costly problems. Issues include:
Not having a contract: Operating without a written agreement exposes your business to significant risks, including misunderstandings about terms, legal vulnerability, and increased liability. It can lead to difficulties in enforcing obligations or resolving disputes, leaving you with little recourse if the other party fails to meet their commitments. Without a clear contract, your expectations may not align, which can damage relationships and result in financial losses.
Contracting with the wrong entity: Signing agreements with an entity that lacks the ability to meet obligations or who is not the party you attended to contract with can leave you struggling to enforce the contract.
Overpromising: Committing to unrealistic terms, such as impossible delivery schedules or warranties, can lead to claims for breach of contract.
Assessing liability: It’s vital to understand your exposure in case something goes wrong. Ensure your liability is proportionate to your business capacity and risk profile and is covered by insurance.
Back-to-back agreements: If your business depends on subcontractors, ensure their obligations align with what you’ve committed to clients.
By having contracts reviewed, you can avoid legal and financial risks.
Strengthening Compliance and Governance
Good governance and compliance are essential for businesses in England and Wales. This includes adhering to the Companies Act 2006 by maintaining board minutes, shareholder resolutions, and statutory records.
Additionally, implementing a comprehensive compliance program helps manage regulatory risks. Training staff, documenting efforts, and staying updated on industry regulations means you can work to prevent regulatory issues and ensure you’re prepared if issues arise.
Conclusion
SMEs need proactive legal support to avoid contract pitfalls, strengthen governance, and manage compliance effectively. By staying on top of legal obligations, you reduce risks and protect your business from costly mistakes.
Contact Us
Please contact us here https://www.linkedin.com/company/104882118 or at amy@adaptablelegalcounsel.co.uk if you would like our support.
For more information, our website is available at https://www.adaptablelegalcounsel.co.uk/.
Disclaimer
The information provided in this blog post is for informational purposes only and should not be construed as legal advice. While we strive to provide accurate and up-to-date information, the laws and regulations discussed may vary based on your specific circumstances and jurisdiction. We recommend consulting with a qualified legal professional for advice tailored to your individual needs and situation.
