A Guide for Small Businesses to Resolve Disputes through Mediation

Small businesses are just as likely as large and mid-sized companies to get involved in disputes with suppliers, customers, competing businesses, or own business partners or employees. Taking this into account, unlike big corporations, small business owners often have limited resources within which they must deal with the conflicts. Clearly, small business dispute mediation (rather than expensive and time-consuming litigation) is an ideal way to resolve conflicts in this situation.

Reputational Advantages of Mediation for Small Businesses

Many small business owners may not realize it, but mediation also offers indirect reputational benefits. When a conflict occurs, the employees, vendors, customers, financiers, and other stakeholders are usually closely watching how the business owner handles the conflict.

Choosing mediation to resolve the dispute in a collaborative manner demonstrates the maturity, commitment and focus of the business owners towards the best interests of all stakeholders and the community.

Moreover, business mediation proceedings are largely kept confidential, which means that business or trade secrets, product pricing, employment policies, marketing strategies, and so on, will not come out in the open, as they most likely would in litigation.

Common Small Business Disputes Where Mediation can Help

Here are two common scenarios where experienced small business mediators can help the parties reach a mutually acceptable agreement.

Payment Disputes

Small businesses often sell goods on credit to their customers, and payment is made once the customer has received the delivery of goods. Payment terms might include 30 or 60 or 90 days credit. If the customer fails to repay the full or partial amount on due date, a dispute may arise. A seasoned small business mediator will help both the seller and the buyer share documents and facts related to the shipment, the quantity and quality of goods, and the terms of payment.

If the quality or quantity of goods is lower than what was agreed upon, the seller may offer a discount to the buyer. If the buyer has a financial difficulty in making payment, the seller may accept payment in installments. The business mediator can help both parties explore all options to meet on some common ground and settle the dispute.

Contract Disputes

Written or verbal contract lies at the core of any business transaction between two parties. The contract contains all the terms and conditions that both sides must fulfill once the contract has been signed. Stemming from this, when one party fails to fulfill one or more conditions, a dispute may arise.

For example, in a construction or home improvement business, a dispute may arise between the builder and general contractor or the contractor and sub-contractors. Similarly, a contract disputes may occur between a manufacturer and an authorized distributor or dealer (wholesaler or retailer).

A knowledgeable mediator with experience in handling different types of small business disputes who have a fair understanding of how these businesses work and the typical nature of disputes that occur in these industries. The business mediator can facilitate both sides to find a resolution by arriving at a compromise because the alternative of bitter litigation may be detrimental to their own business interests.

Results of Small Business Mediation

As long as you have chosen a skilled and experienced small business mediator, chances are that the business mediation may result in a relatively quick and fair settlement. In a successful mediation, both parties will leave with a signed agreement, or at the minimum, a signed memorandum that spells out what the disputing parties have agreed upon.

Even if the small business mediation does not immediately result in a settlement, both parties would still have made progress on understanding the other side’s position. That could reduce the conflict and pave the way for further meetings and negotiations to resolve the dispute.

Reliable and Effective Small Business Disputes Mediation

The last thing you want while running your business is to let your small enterprise get distracted or derailed because of a business dispute. The earlier you decide to choose the path of small business mediation, the easier it will be to find a quick, affordable, and satisfactory resolution.

Carmela DeNicola

Carmela DeNicola, the Co Owner at Advanced Mediation Solutions, is a business and workplace mediator with over three decades of executive experience in the corporate world. Carmela handles all types of business and workplace mediation. She works with municipalities, schools, private companies, partnerships, non-profits, and any other type of entity. MORE