Everyday in the life of a startup is a hectic one. There’s just so much to do that a lot gets forgotten. If you’ve started a business before, you’re probably familiar at least with the long list of tasks ahead of you. Someone with less experience, however, may not even be aware of some things that need to be dealt with.
One common mistake is starting aggressive fundraising before ensuring compliance with important standards and regulations in your industry. At these early stages of your business, it’s easy to put off compliance or even see it as a nuisance eating up your time, but it really should be higher up on your list of priorities.
What is compliance?
Every business is legally bound to any number of government regulations that stipulate best practice in a given industry. These regulations are often meant to protect consumers and foster confidence. Then there are industry standards, which generally aren’t legally binding, but are critical for any growing business nonetheless.
The mistake often comes in thinking it’ll be easy to stay on the good side of these standards and regulations. It isn’t. Compliance with these documents often requires technical and legal expertise to understand complex clauses and cover all your bases. But the work that goes into compliance is well worth it. Sometimes a minor mistake could cause a major problem.
Why compliance is important early on
Another common mistake is imagining that compliance is best dealt with later in development, when you’ve got more resources to spare and start trying to reach a larger audience, making your more vulnerable. But running a business is often like riding a bike: you have to master the fundamentals before trying to do flips or riding without hands.
Compliance is crucial for investors. True, you might still be able to raise some funds with nothing more than a great concept and quality product, but crossing your T’s and dotting your I’s with compliance shows that you have more than just a fancy idea – you’ve also got a functioning responsible organization on your hands that investors can trust their money with.
In fact, many investors are likely to ask you point blank if you’re compliant with a few of the most important standards and regulations like ISO 27001 and PCI DSS. Non-compliance in these areas could lose you important sources of funding. If you’re selling your small startup, on the other hand, buyers are going to expect you do your due diligence and meet certain cybersecurity standards.
What’s more, the perception that your business is more vulnerable the larger it gets isn’t entirely true. Yes, there are more eyes on you and you become a bigger target for lawsuits, cyber attacks and all the other things standards and regulations aim to prevent, but you’re also more likely to have the reserves to weather such a storm as a larger business entity.
Small businesses are the most vulnerable technologically and everybody knows it, making you an easy target. Small businesses are also the most vulnerable financially, meaning that one bit of trouble could be the end.
Standards and regulations are meant to protect you from all of that, acting as a secure foundation for you to grow without constantly worrying about cyber vulnerabilities and legal trouble. Wouldn’t you rather have that out of the way early on (preferably before fundraising)?Share this on...