Regulatory Compliance: The First Steps Can Be the Hardest

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You’re a small startup now, but you recognize that as your company grows, regulatory compliance will play a larger role in your day-to-day operations.

When you have only one employee and you can count your clients on one hand, data management, financial controls, and HR protocols can be monitored at a glance.

But as you grow, expect your compliance requirements to sprawl. And during this time frame, expect these requirements to change and evolve.

You’ll need to put systems in place that can scale as your company expands. And first, you’ll need to determine exactly who you’re accountable to, where they are, and how this accountability will work. Which state, local and federal laws apply to you? Which agencies administer these laws? And how will these agencies deploy inspectors, conduct audits, or request reports that may require your cooperation?

If you don’t have the answers to these questions, you’ll have to find them. Your legal team can help.

Reach out and connect.

You (or your legal counsel acting on your behalf) may find it expedient to contact the local and state agencies that will handle your regulatory issues. If you’re running a restaurant, don’t wait for local health inspectors to come to you; find out who they are, go to them and introduce yourself. If you’re running a health tech startup, the same common sense applies. In addition, the same proactive approach can help you navigate the rest of the regulatory network that connects your business to a community of customers, vendors, employees and partners.

Strong vetting can keep things simple.

You’ll avoid a host of thorny regulatory problems if you vet your vendors and service providers carefully before signing any contracts. For example, if your cloud-based data service provider cuts a corner or violates a law and your customer data is hacked or breached, you’ll be held accountable. Recognize the significance of your background checks and interviews before you sign on with any partner—from a new employee to a lawn care service.

Put your compliance plan in writing.

Create a compliance plan, document it in writing, and update it on a regular basis. Your legal team can help you with this process. If you encounter questions or auditor concerns, your documented plan can help you explain your intentions and prove your due diligence. Some compliance deadlines are difficult to meet on shoestring budgets with limited staff, but as you scramble to meet a set of updated requirements (as with the GDPR, for example), your progress can be made transparent, which may help mitigate problems and penalties. This kind of documentation can also help you appeal decisions that could otherwise damage your budget or reputation.