2. Don't Be Naive

So many people in business get burned by their customers simply because they are too trusting. For example, some of you may have shipped products before customers' payments cleared. Or you may have completed agreed upon work without asking for a deposit. Both are risky propositions as many new entrepreneurs discover hard way, especially if they do business online.

You can protect yourself by always asking for a partial payment in advance and by always waiting until a customer's payment has cleared before you ship their products. Another method of protecting yourself and your customer is by using a service such as Paypal.com to handle your transactions. The service protects you from non-paying customers and offers your customers protection for lost, damaged, or unshipped products.

3. Know Your Local Laws

One of best ways to protect yourself is by becoming informed. When you know your legal rights, you'll have a better understanding of how to effectively deal with troublesome customers.

For example, some states don't allow you to limit a customer's right to return a product beyond a certain time limit, so you may not legally be able to enforce a guarantee of only one week. On other hand, if you know your rights, then you'll also understand what steps to take in case legal action on your part is necessary.

For instance, you may want to send a certified letter demanding payment before you file a lawsuit. Additionally, if you appear knowledgeable about your rights, many customers might think twice before failing to pay or committing fraud.

The bottom line is that you deserve to be protected just as much as your customers. A few advance precautions now can ensure that you'll have a long and satisfying business relationship with your customers.