The retail sector has taken a battering in recent months, with one-time high street giants such as Peacocks, Game and Clinton Cards going into administration. So, just how can a small business save itself from failing?If you own a business, you don’t need us to tell you it’ tough out there. In such an unpredictable financial climate, even those who are coping well should take steps to safeguard against possible future difficulty.The best way to protect yourself is to make sure your legal paperwork is watertight. Drawing up a thorough set of terms and conditions can go a long way to preventing disputes with your customers and suppliers.Good employment contracts enable more flexibility in managing your staff during times of financial hardship, particularly if paying their salaries becomes difficult, or they become dissatisfied with changing working conditions such as reduced hours.Management and ownership disputes often arise when financial difficulties are experienced and can rip a business apart. Draw up appropriate shareholders agreements at a time when everyone is on good terms, as it may prove vital in governing things if relationships turn sour.There’ nothing more frustrating than preventable cash flow problems, so have good debt recovery procedures in place and don’t let bad debts get out of control. Outstanding invoices should never go beyond 90 days.Property can be your biggest asset, but when money becomes tight it can also prove to be a costly white elephant. If leasing property, negotiate a right to sub-let in your lease together with adequate break clauses in case you find yourself needing to downsize or move somewhere less expensive.With regards to equipment, tools, machinery, company cars and any other items required to run your business, consider leasing agreements rather than outright purchases to assist cash flow and potentially avoid legal risk, as leasing agreements rarely require the owners of the business to give personal guarantees.Lastly, if the worst should happen, be ready to accept and deal with it. It’ easy to develop a sentimental attachment to your venture, but you mustn’t let that blind you to the reality that businesses can and do fail.We offer free legal advice to businesses of any size & we’ll even come to your premises and review your paperwork for you. Contact us now to find out more and book your appointment.Disclaimer: This information is for guidance purposes only and does not constitute legal advice. For more information contact Setfords Solicitors.