Why business compliance matters
Business compliance matters for several reasons:
- The main reason for most entrepreneurs is the fact that it reduces risks. Complying properly with regulations cuts down on costly fines and legal issues that can hold companies back.
- However, compliance also matters for another reason: reputation and trust. Firms that abide by the rules are more likely to be taken seriously by stakeholders and trusted by customers. Those that don't can get a negative reputation that can hold them back.
- Finally, there is the competitive advantage that proper compliance brings. In regulated industries, being more compliant can actually be a key differentiator, especially if it's challenging to obtain compliance.
How to make your business compliant
Making your business compliant requires the right strategy. Here are some of the tactics that we recommend:
Identify the regulations that apply to you
The first step is to identify the regulations that apply to you. For example, you might need a tax specialist to tell you which tax rules are applicable at the federal, state and local levels. You may also need to think about things like OSHA safety and FTC consumer protection.
Internally, ensure that your business has the right structure. For example, you might need an LLC or a corporation. You'll also need to think about the operational side of your company, like the employees that you hire and the international dealings that you'll have.
Conduct a compliance audit and risk assessment
While you're doing all of this, you'll want to conduct a compliance audit and risk assessment. The idea here is to identify gaps in your compliance routine and high-risk areas where you may get into trouble in the future. Evaluate all of your current practices and see where you stand. If you're falling short of requirements, develop action plans to ensure that you get closer to them.
Develop clear policies, procedures, and controls
The next step is to develop clear policies, procedures, and controls. These are the minimum expectations that you have operationally for your company. You'll want to do things like define roles and responsibilities, and then make it clear who handles reporting in your organisation. You'll also need to tailor all of your activities for your business size. For example, your company may need basic policies which are put in place at every level and for which employees receive regular training.
Appoint accountable leaders
Finally, for each key pillar of compliance in your organization, you'll want to appoint accountable leaders. These are individuals who take responsibility for a particular obligation that your company has. For example, you might have somebody in charge of OSHA safety procedures or financial reporting. Putting these key individuals in place creates a culture of compliance.
