Compliance is one of those things that many small business owners tend to overlook at the start of their business ventures. They do so because many feel it is not essential. But to meet your legal obligations and to protect your business, compliance is necessary. The concept of compliance is to make sure people follow it and act responsibly.
Small business owners should understand that compliance is important for their business, otherwise they may land into unintended expenses. According to the latest study conducted by ADP research institute, 30% of SMBs in United States have reported unintended expenses that include fines, penalties or law suits because of noncompliance with government workforce and payroll regulations. These firms that were fined reported an average cost of $91,300.
As a small business owner, you may be flooded with loads of work. Due to lack of resources, the focus could be more on project execution. Of course, it is critical to deliver projects on time, but at the same time neglecting the importance of workplace compliance, not only puts you at risk but also increases the costs to the company.
Why compliance is important for your business?
“Good compliance means good business”, this applies to every business irrespective of size or type. It protects your business from both regulatory and non-regulatory means. A good compliance will help you:
- Avoid breaking the laws and sufferings from the consequences. Therefore, it saves your time, money and keeps hassles away.
- Protect the health, safety and welfare of the business. (Hiring, firing, discrimination, harassment, wages, payroll and others).
- Create a better working environment for your employees, which indirectly boosts the productivity.
- Prevent or minimize workplace accidents (injuries, fires, damage to the property) that hurt your productivity.
What are the consequences of not being in compliance?
- Can damage your business, reputation and brand which may result in lost revenue.
- Frauds or breaches may range from fines to court action, work stoppage, withdrawal of license/shutdown of your business, etc.
If your business starts facing court cases filed by your employees, customers or others, your public image is damaged and people will not trust your business. By being in compliance, your business will have a positive image and will build consumer trust.
How to manage compliance in business?
You need to set rules to make sure everything is fair and safe for your business, employees and customers. For that you need to:
- Identify: Identify the common risks that your business comes across.
- Prevent: You can protect your organization by designing and implementing controls from those risks.
- Detect: Regularly monitor and generate reports on the effectiveness of those controls
- Respond: Resolve the compliance issues as you come across.
- Other ways of managing of compliance in business
- Clearly communicate the compliance with all the members of your organization. Example: By conducting regular training program – summarize expectations how each member of the organization should conduct themselves at the workplace, general goals of your organization, outline how tasks should be completed, the consequences of violating compliance and so on.
- You can detect the compliance violations in your organization by audits, reviews and regular monitoring.
- Take appropriate measures, if someone in the organization violates compliance.
What should you expect?
As a small business owner, you expect that all your employees obey and abide by the law. And you will not tolerate or entertain any violations.
With right compliance in place your business will have reduced legal issues, better public relations and higher employee retention that will lead to higher productivity and better market performance.