Compliance in business can be incredibly complex to get your head around, especially if you’...
Compliance in business can be incredibly complex to get your head around, especially if you’re a new start-up or small business with a limited headcount. Ensuring you remain compliant with the relevant business compliance standards is crucial to avoiding financial, reputational and legal penalties that can put your organisation in challenging situations.
Thankfully, company compliance doesn’t have to be something that keeps you up at night, and we’ll explain how in this guide. We’ll delve into why business compliance is important for small companies, the different types of compliance you should be aware of and how your organisation can get to grips with compliance in business.
In this guide, we’ll explore the following:
Compliance revolves around adhering to a set of rules and regulations, spanning laws, industry standards, codes, and internal policies. These rules, established by government bodies and organisations, act as the framework businesses must follow and abide by to operate legally and ethically.
Governments employ regulatory bodies to enforce and oversee compliance, ensuring that companies operate in line with the established regulations - regulations that we’ll highlight later in this guide. At the organisational level, companies can also implement their own rules to govern the conduct of employees and safeguard their interests. Both government compliance and business compliance can be split into internal and external compliance.
Of course, compliance is important to businesses of all industries and sizes. However, focusing on the question, ‘Why is compliance important for small businesses?’ below are the key points you should know when developing your understanding of the importance of compliance.
For context, the cost of non-compliance has increased by over 45% over the last ten years, with the average cost of a non-compliance event costing $4 million in revenue. Additionally, in the US alone, 55% of financial penalties were given to small businesses in 2022. Therefore, smaller organisations must adhere to compliance regulations to avoid penalties that could put them out of business.
Lawsuits often target small businesses that fail to abide by specific regulations for deliberate cost-cutting purposes or due to an innocent lack of education about the relevant rules and regulations. Regardless, if your business is found to be non-compliant, governing bodies will show little sympathy in pressing legal action against your small business.
By adhering to the relevant regulations, your company can demonstrate its commitment to operating within the legal framework, reducing the likelihood of legal complications that could negatively impact your reputation and potentially result in the closure of your business.
This trust stems from the understanding that your brand prioritises customer well-being, adhering to regulations that safeguard their interests. Building trust can enhance brand awareness, customer loyalty, and an overall positive reputation in the market.
Additionally, customers are often more inclined to make purchases from small businesses that follow established rules, as it gives them confidence in the quality and legality of the products or services they’re investing in.
Additionally, suppose your employees see compliance as a high priority within your business; then, they will be more inclined to remain loyal to your brand and feel more secure in their role.
Other partners and third parties you associate with in your market typically prefer dealing with compliant businesses that mitigate risks associated with non-regulated products and services. Therefore, building a trusted reputation of compliance in your small business can help your company grow from a small to a medium and, one day, become a global entity within your industry.
Ultimately, small business compliance forms the bedrock upon which you can build trust, foster growth, and safeguard your overall reputation in the competitive landscape of your industry. To further understand why you should be compliant, it’s essential to be aware of the different types of compliance.
As we’ve established, understanding the intricacies of business compliance is essential for smaller organisations to avoid falling foul to financial damages, reputational harm and legal action that could put your company's future in doubt. But what are the main types of compliance you should be aware of?
From corporate compliance to financial compliance, in this section, we’ll outline the primary types of compliance you should know as an owner of a small business.
These types of data can include the following:
Typically, HR managers play a crucial role in ensuring this type of compliance is upheld whilst keeping an organisation updated with the latest legal requirements. Of course, as a smaller business without an outright member of HR, this responsibility may fall on you, the company owner.
Adhering to financial compliance regulations can reduce financial risks, enhance the reputation of your small business, build customer trust and loyalty, open new market opportunities, and provide a competitive advantage.
Understanding these types of compliance and incorporating them into your small organisation can help ensure you take a comprehensive approach to legal and ethical considerations. Whether internal policies or external regulations, each type plays a pivotal role in safeguarding your company, fostering a positive workplace environment, and contributing to long-term success in the competitive business landscape.
Learn more about these types of compliance by reading our guide: What are the different types of compliance in business?
As an owner of a small business with limited budgets and resources, getting to grips with company compliance can be challenging. Regardless of the size, running an organisation is no easy feat, let alone the pressure of understanding the various types of compliance.
With that said, one option to help you get to grips with business compliance may revolve around continuous learning, and keeping track of changes, from international laws to local policies relevant to your operations, is essential. To further support you with this, you could enrol on various certifications and training to get up to speed with compliance. However, we appreciate that many owners of small businesses don’t have the time or headspace to commit to this.
Therefore, another alternative is to invest in bringing an expert into your business who understands company compliance and can take the headache of compliance away from you so that you can focus on growing your organisation. This individual could come in the form of a chief compliance officer.
From ensuring your business remains compliant, identifying and mitigating risks, and protecting your reputation to building a culture of compliance and ultimately bringing a wealth of compliance-related expertise, there are many reasons why you should hire a chief compliance officer.
Alternatively, if hiring permanent compliance experts is outside your budget, you may want to consider outsourcing your legal services. This could be a more cost-effective and flexible option for ensuring your small business remains compliant.
Overall, understanding and prioritising business compliance is crucial for the success and longevity of small companies. Company compliance, encompassing both internal and external aspects, makes up the ethical and legal framework within which businesses operate. Small businesses must be particularly vigilant, as failing to comply with the appropriate regulations can lead to severe financial penalties, reputational damage and legal actions.
Compliance protects against fines, shields businesses from legal liabilities, builds customer trust and fosters a positive workplace environment. The diverse types of compliance in business, including corporate, regulatory, data, HR, health and safety, and financial, each play a pivotal role in safeguarding a company's interests and contributing to long-term success.
Educating yourself on these compliance types can empower your small business to streamline internal processes, enhance customer trust, and facilitate growth. Moreover, our guide emphasises the importance of continuous learning and staying informed about changes in laws and policies. For small business owners with limited resources, strategic solutions like hiring a chief compliance officer or outsourcing legal services provide practical solutions to navigate the complexities of compliance.
In essence, small business compliance serves as the foundation for building trust, ensuring growth, and safeguarding your reputation in the competitive business landscape. Small businesses can succeed and contribute to the ever-evolving business environment by incorporating a comprehensive approach to legal and ethical considerations. We can also support this, which you can learn more about below.
If you’re a small company seeking to expand in your industry but require support from the business compliance side of things, we can help. As a reputable compliance recruitment agency, we provide the top compliance talent on the market to businesses in pivotal sectors like asset management, banking, consulting, fintech, and insurance. Our customised approach is geared towards optimising your quest for top-tier compliance professionals who can fortify your organisation's future.
Contact us today to explore how we can address your compliance recruitment requirements.
