Worried About Regulation? How to Prep Your Business Early for Lifelong Compliance
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Written for EO by Jim Moran, founder and managing partner of ValueStreet Equity Partners.
Shortly after the European Union enacted its General Data Protection Regulation (GDPR), France’s regulators fined Google $57 million for violating the privacy law. That fine might not be a huge deal for a company the size of Google, but the message to the world was loud and clear: All companies will be held accountable for compliance.
GDPR only affects companies that do business within the EU, but it isn’t the only regulation that organizations need to worry about. When I ran an advertising business in the U.S., we faced just as much scrutiny for our advertising programs—and we paid a nominal fine for not knowing the applicable laws ahead of time.
We also faced tax regulations from different state authorities that believed we owed them. Any internet brand that sells across state lines must grapple with this issue until the federal government standardizes digital taxation. We got our feet under us eventually; more importantly, we learned how to succeed in environments designed to regulate most of what we do.
The Biggest Regulation Challenges Come Early
Compliance is essential at any stage of your business’s development, but learning how to comply is most important in the early stages. You don’t know what you don’t know, and it’s easy to get stuck in a difficult situation. Even if you achieve compliance, most regulatory bodies can still hold you accountable for past incidents of noncompliance.
On top of legal requirements, compliance is in high demand. According to a 2018 Axios poll, more than 55 percent of Americans worry that the government will not do enough to regulate tech companies. Despite this fear, companies that do business in more than one state already have to submit reports to each of those states.
As more companies move online, regulators will continue to crack down on standardizing how these businesses sell products, store information, and tax their customers. The ability to navigate this tangled web of regulations will be an important skill moving forward, and these three tips can help you get started:
1. Hit the legal books.
To be in full compliance, you must first fully understand the laws that govern your industry. Get ahead of regulatory scrutiny by studying the guidelines you should be abiding by. If you own an online business, that means advertising law, privacy law, and any other laws specific to your industry.
2. Document everything.
If you do come under scrutiny, the best remedy will be documented proof of your efforts. Document every measure you take to meet regulations as well as procedures you’ve implemented for dealing with issues. This is especially important if you store customer data and experience a breach.
3. Keep an ear to the ground.
Avoiding fines and violations is the key to compliance, but it isn’t the only measure of success. Monitor how the public perceives your business—especially in the case of bad press and negative reviews. Get ahead of the negativity early and set the record straight, but adjust your policies whenever negative feedback is valid.
You have enough on your plate as an entrepreneur that you shouldn’t have to worry about losing it all because of an unintentional rule violation. Regulations can be intense, but learning which ones matter to your business and how to successfully meet them is one of the most important skills for you to sharpen.
This article was originally published on the EO Global Octane Blog.
Entrepreneur’s Organization is a global network of over 13,000 business owners. Learn how EO Chicago helps over 100 business owners grow.
