Home Entrepreneurship The 4 Things Every Entrepreneur Should Know About Compliance

The 4 Things Every Entrepreneur Should Know About Compliance

by Olufisayo
Things Every Entrepreneur Should Know About Compliance

One of the things that will keep you awake at night as an entrepreneur is anxiety over whether your business is always in compliance with relevant laws and regulations. What makes matters worse is that the regulatory environment is never static. What was perfectly legal 12 months ago could very well be against the law today.

Regulatory change is a major risk factor for both new and established businesses. As your business grows, the rules and regulations that apply to it increase in tandem.

To stay on top of this ever evolving landscape, there are a couple of things every entrepreneurs needs to recognize about compliance today.

Things Every Entrepreneur Should Know About Compliance

1.   Adopt a Unified Strategy

The days when the responsibility for compliance was solely that of the compliance, legal, risk and audit departments are long gone. The role of these governance departments should be seen as that of providing guidance, verification and reassurance. Your business is unlikely to consistently meet regulatory requirements if all employees and departments aren’t committed to the cause.

       

Since governance departments aren’t on hand to make a decision about every action each employee makes, they may unearth a problem when the damage is already done. Think about the recent Volkswagen’s emissions scandal where there’s a likelihood that line managers made illegal and unethical decisions without reference to the company’s compliance team.

2.   Technology to the Rescue

Information technology has revolutionized nearly everything we do at home, school and work. It makes sense that compliance policies and procedures aren’t left behind in this relentless drive toward automation. Moving from manual to automated compliance monitoring reduces errors, allows wider test scope and reduces hiring costs. There are many varieties of Governance, Risk, and Compliance software that can help your business in this regard.

For example, a liquor store could use an age verification scanner such as Minor Decliner to reduce the risk of selling alcohol to someone who’s below the legal drinking age. Compliance technology makes it easier to establish audit trails, monitor trends, generate periodic reports and resolve problems quickly.

3.   Anticipate and Mitigate Potential Risks

Hardly a week passes by before a major corporation is in the news headlines for the damages and penalties they have to pay for not complying with the law. Noncompliance leads to more than just direct financial costs. There’s perhaps the even more problematic long-term impact in the form of damaged reputation with customers, loss of investor confidence and lingering skepticism by wider society.

When you examine many of these noncompliance incidents, you quickly notice that quite a number of them were avoidable. Successful entrepreneurs anticipate problems well before they materialize. One of the best ways to do this is to incorporate legal and regulatory risk assessment in your growth plans. You should also keep your ear to the ground so you can pick up looming changes in the regulatory environment that could affect how you do business.

       

4.   Take a Decisive Stand

An entrepreneur is the leader of their business. The values and company culture that will define the organization will largely be determined by what the founder stands for. As your business grows, there’s no guarantee that there won’t be a compliance-incident every once in a while. However, companies that suffer widespread and repeat noncompliance problems likely have a flawed institutional culture.

Here’s why. If you as the leader do not take a firm position on compliance and make it clear that certain actions and behavior will not be tolerated, employees may assume that you consent of their misdeeds. Every person you hire should go through an orientation process where they are taught your core values and what their role is in ensuring these aren’t violated.

Whenever a large organization is charged with a serious violation of the law, the CEO is often the first person to resign. As an entrepreneur, the primary burden of compliance ultimately rests on your shoulders. By understanding and acting on the above four principles, you reduce the likelihood of your business failing to follow laid down rules and regulations.

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