How to offer warranties in your small business
IBF Entrepreneur Online –
July 13, 2019
It happens to the best of us – no matter how good your product or service, sometimes a customer or client won’t be happy. What do you do? This is why your small business should have warranties.
What is a warranty?
A warranty sets expectations for your product or service. It helps your customers understand what they can do if they run into an issue, and it helps you cover your bases. Warranties show that a company is willing to stand behind what they sell.
Some examples of warranties include a full refund, partial refund, store credit, or even no refund.
How to set up a warranty
The length of the warranty you offer depends on your industry and your products or services. Sometimes, products will come with warranties from the manufacturer. Warranties on services cover satisfaction with the service.
Here are some questions to ask when creating warranties:
- Will your warranty cover all products or just certain ones?
- Will your warranty terms differ across products or services?
- Should the same warranty be offered in all markets, or just some? This decision will rest on local laws.
- What must the customer do or not do to keep the warranty valid?
- Who will honour the warranty – the manufacturer, wholesaler, retailer, or dealer?
- Who should be responsible for responding to a warranty claim?
Warranty claims involve a cost to the small business, but the potential cost to your business of providing no warranty at all can be very significant.
A new small business may find it hard to estimate the problems that could come up with its product or service. We believe warranties are an important aspect of a small business, but you can take steps to minimize their necessity. Careful field-testing of a new product or service will help to take care of product reliability or liability issues once your product or service sees the light of day.
As always, we recommend that you have a lawyer or other professional review your product or service warranty program, so you can get advice on the extent of risk your business is potentially carrying.
Source: GoForth Institute
