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Regulatory Compliance: Practical Tips for Startups

Startup founders typically feel pressure from all directions, no matter well-funded or well-oiled a given team may be. Working together to achieve goals and meet deadlines can be harder than it seems at first, and of course, preparing for each round of a fundraising series can mean lost sleep and long hours.

In the rush and bustle, it can be easy to let regulatory issues slide to the bottom of a list of priorities. And after all, regulatory fines and penalties sometimes seem reserved for companies with a lazy approach to data and financial protections, or an intentional plan to defraud investors and clients, which of course doesn’t describe you at all. But before you push this priority to the back burner, pause. A few simple moves can keep you on track without draining your time or resources.

Find out who your regulators actually are

An hour or two with a search engine can help you understand exactly what and which state, local and federal regulators will oversee your growing business. If you’re preparing food, providing financial services, or taking responsibility for managing client data, your regulators will fall into different categories and may include just one agency or several. Some proactive companies reach out directly to these agencies to clarify requirements and ask questions. (Your regulatory consultants or legal team can do this for you)

Trust but verify

When it comes to partners and vendors, keep re-evaluating and re-examining these companies at least once each year. Your business depends on their compliance, not just your own, so make sure you know them as well as you think you do.

Document your compliance plan in writing

It’s not enough to just have a compliance plan in mind, or to have occasional discussions about it with your team. No matter where you are in the process (even if your plan is far from complete), make sure you can show documentation that proves you’re taking the process seriously. Of course your controls will change and improve with time, but at a moment’s notice you should be able to show which regulations your business adheres to and which agency or agencies set those standards. Your internal policies and protocols should also be written down, so you can demonstrate your process if questioned.

Build your system to scale

Expect your business to grow. No matter how ambitious your long term plans may be, your company will very likely change in size and scope, and your compliance plan should be resilient in the face of these changes. Expect your staff and HR needs to grow (even if you only employ one or two people) and expect to eventually conduct foreign transactions, even if you haven’t done so just yet. You can also expect your data management requirements to eventually expand as well.