One of the biggest challenges small and medium-sized enterprises (SMEs) face is staying compliant with regulatory conditions. Due to the current administrative burden and often high legal barriers to entry, SMEs often find it far more complicated than larger enterprises to screen the regulatory environment and stay abreast of new and changing regulations.
According to an OECD survey, 38% of SMEs with an online presence say that international regulations are the main challenge they encounter with trade, and at least 12% of all European SMEs cite regulatory compliance in general as their most pressing concern.
Fortunately, significant strides have been made in reducing compliance’s legal and administrative burdens. However, regulatory procedures’ sheer range and complexity still pose substantial obstacles to establishing and growing a business.
There is no “one-size-fits-all” solution for solving the problem of simplifying regulatory compliance for SMEs. Still, it is more important than ever that these businesses stay on top of regulations.
Compliance is Key To SME Success
Aside from the apparent benefit of remaining on the right side of the law, compliance provides several other important advantages for SMEs.
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It protects their reputation.
Scandals like money laundering, bribery, and fraud not only have significant legal repercussions but can also irrevocably damage a company’s reputation. This hurts their long-term growth and solvency, especially since image rehabilitation is a slow, costly process.
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It guards against severe fines and imprisonment.
Compliance violations are serious offences, and the penalties are equally severe, even for small companies. In addition, company executives may be personally liable for infringements without a proper (and adequately monitored) compliance system.
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It helps mitigate wrongdoing early.
Enforcing a robust compliance system allows for the early detection of red flags for faster course correction. Enabling early, proactive action helps SMEs avoid legal and professional problems later.
Six Simple Steps For Improving SME Compliance
Knowing where to begin is often the most challenging part of implementing compliance regulations. Here are a few steps to set SMEs on the right path.
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In-house Training
Investing in in-house compliance training gives the company control over cultivating a team of compliance experts. This type of vocational training helps all employees gain a deeper understanding of the importance of the topic and establishes a group of employees who can guide the rest.
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Customer Communication
Smaller companies typically have more personal, manageable relationships with clients. Leverage this advantage by using support communication channels to explicitly discuss legal restrictions with customers to avoid infringements.
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Third-party Consultation
Inviting a third-party expert for a personalised consultation is another great starting point. Get bespoke, actionable advice for training employees and tailoring compliance measures to produce results.
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Customisation
Whether through an internal audit or outside consultation, be sure to establish compliance measures that are customised for your business. This includes business size and individual needs.
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Automation
Automation is an excellent tool for streamlining compliance. However, only automate the most simple and repetitive tasks. This frees employees to focus on more important topics that require more human input, such as automating documentation so an expert can spend time developing better GDPR measures.
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Data Centralisation
SMEs have fewer employees than larger corporations, so centralising data is a viable way to ensure that everyone in the company stays abreast of relevant information. As a result, centralised data facilitates cooperation across departments, leading to more reliable metrics and inspections.
Compliance is Everyone’s Responsibility
Compliance starts at the top, but it takes an entire team to implement and maintain a robust regulatory system. Promoting good compliance practices and empowering employees with the necessary tools and information will set an SME on the right path toward compliance.
About the Author
Valentin Ivanov is the regulatory compliance expert and co-founder of Quanloop
