Yes, you need a return policy no matter the size of your business. Very small businesses sometimes assume they can handle every return on a case-by-case basis, but there are a few reasons this is a bad idea. First, it allows inconsistency which could lead to some customers feeling as if they've been treated unfairly, especially in a community where they can compare their experiences. Second, it's not sustainable, since as soon as your business begins to grow, you can get overwhelmed by trying to handle returns in this fashion. Third, depending on your location, you may need a published return policy to legally operate.