5 Big Mistakes That Can Shut Down Your Business
Making a few mistakes can be a great way to learn tough lessons about running a business. But some mistakes can cost you more than just your confidence; they can lead to your business being shut down -- maybe for good.
What are some of the worst mistakes you can make? Here are five big ones that can put your business out of commission:
- Being declared a public nuisance. A business can be declared a public nuisance when operations negatively affect the health, safety, welfare, or comfort of the public, such as the emission of offensive odors, loud noises, or bright lights. If a public nuisance lawsuit is successful, a business can be enjoined from operating, which basically requires shutting down until the problem is solved, if it can even be solved at all. For example, the owners of a hot-sauce factory were faced with possible shutdown last year after the company was enjoined from continuing production following a public nuisance suit.
- Using your business for personal pursuits. It's always best to keep your personal life personal and your professional life professional. When the two meet, sometimes bad things happen. Case in point: The owners of a Chinese restaurant who dragged the carcass of a deer killed on a nearby highway into their eatery's kitchen to cook for their family, in full view of lunchtime customers. In at least some states, roadkill is fair game for private consumption, but in a commercial kitchen, hauling in a dead deer will most likely get you shut down.
- Operating without the proper permits. If your business is one of the many for which one or more permits is required, trying to operate without fulfilling the requisite permitting process is a sure-fire way to get shut down. Permits your business might need include zoning permits, building permits, health permits, signage permits, and fire permits.
- Failing to observe government regulations. Along with permits, your business is likely subject to a litany of local, state and federal regulations; failing to follow these rules can get your business shuttered. In one notable case, a family that owned a riverside campground refused to test their water for contaminants. They claimed theirs wasn't a "public water system," despite being told for years by the EPA that it was. Not surprisingly, the owners lost in court, twice.
- Operating in a legal gray area. Whichever side of the medical marijuana debate you find yourself on, one thing is for sure: The law is unsettled. If your business exists in the legal gray area of the medical marijuana industry -- legal in some states, illegal under federal law -- you can potentially get shut down at a moment's notice, as 26 medical marijuana dispensaries in Montana found out in 2011.
Of course these are just five examples of big mistakes that can shut down your business. To avoid these mistakes, and others, bookmark this blog and check out FindLaw's comprehensive section on Small Business Law.
Need legal advice on how your small business should operate? Consult with an experienced business attorney about your options.
Editor's Note, July 12, 2016: This post was first published in July 2014. It has since been updated.