Compliance 101 for Growth-Stage Startups
In the early days of a business, owners have a lot to worry about: whether their product or service is a good fit for the market, whether they can effectively reach their target audience, what pricing strategy will help them grow. Needless to say, cybersecurity compliance may be the last thing on their minds, no matter how important it might be.
With so many other important problems to solve, startup founders might wonder whether compliance is an issue they can put off until a later stage of the company. While this mindset is tempting, there are several reasons founders should consider getting started with compliance early on.
The Importance of Laying a Security Foundation
If you have any hopes of scaling an enterprise that remains successful for years to come, it’s unquestionable that security policies and procedures will be necessary. Even if your business isn’t in a highly regulated industry that requires compliance with specific regulations, someone will likely want to see proof of security down the line (see the next two sections of this post).
Like with any other process, it’s much easier to establish a solid foundation for security compliance when your business is small rather than when it has grown large and complex. Suddenly introducing security requirements at a later stage can lead to confusion and frustration among employees. Plus, a lackadaisical approach to security puts your business at risk for breaches in those intervening years, which can make or break a young company.
Starting early with compliance means that new hires are automatically trained on good security practices, and you can easily layer in more sophisticated procedures over time as your needs and goals change. Specifically, undergoing a compliance audit like SOC 2 can identify gaps in your strategy that you likely wouldn’t uncover otherwise.
Showing Investors You’re Serious About Compliance
Okay, we know you skimmed that last section to get to the important stuff: investment. The reality these days is that investors care about compliance. Many investors see a lack of security strategy as a major risk, and they may decline to invest in your business if it proves inadequate. In fact, our 2023 Compliance Benchmark Report found that 29% of organizations have lost a new business deal because they were missing a compliance certification.
Going through compliance audits early on can show investors that you take security seriously. Plus, an audit report can make it much easier for your team to answer questions about security during the investor’s due diligence process.
Setting Yourself Apart from the Competition
More than ever, consumers care and are knowledgeable about cybersecurity, especially when it comes to their personal data. When choosing between similar SaaS products, buyers may choose the business that clearly demonstrates a commitment to cybersecurity compliance.
In a survey conducted by McKinsey, 85% of respondents said that knowing a company’s data privacy policies is important before making a purchase. Even more significant, many people surveyed said they consider switching brands when a company’s data practices are unclear, and a majority said they look specifically for companies that have a reputation for protecting data.
As you look to increase revenue over the early years of your business, committing to cybersecurity and communicating your policies to the market can help you build trust with customers and gain an edge over organizations whose security strategies are less mature.
Compliance Challenges for Startups
Technology industry analysis from A-LIGN’s 2023 Compliance Benchmark Report
There’s no doubt that compliance can be time-consuming, expensive, and difficult to manage. The technology industry in particular, which many startups are in, conducts more audits per year and uses more auditors than average.
Here are a few of the top issues startups face in the compliance process:
- Limited staff resources: This is the greatest challenge for most organizations, especially early on. Managing compliance risk takes time, and few startups have any to spare, let alone dedicated staff members for compliance.
- Multiple audits: Especially in the technology space, it is common for organizations to conduct multiple compliance audits a year, which stretches resources even thinner.
- Manual collection of data: Without any automated systems in place to help with compliance, teams have to manually pull together information needed for audits. That takes — you guessed it — even more time.
How a Strategic Compliance Approach Can Help
The solution for minimizing compliance challenges comes down to one thing: planning. That’s where the idea of strategic compliance comes in. Strategic compliance takes a proactive approach to audits and assessments by consolidating audits and auditors into a single annual event.
Why Audit Consolidation?
Our 2023 Compliance Benchmark Report found that one of the greatest compliance process challenges organizations face is the complexity involved in conducting multiple audits throughout the year. Duplicating efforts across various audits and providers, rather than getting multiple evaluations accomplished all at once, is the biggest downside to traditional compliance.
Consider, for example, that if you complete a SOC 2 certification, you will have met 100% of evidence requirements for SOC 1 and 90% for HIPAA. So, why go through separate audits at different times when you could have covered nearly all the requirements for three compliance processes in the same audit? With a strategic approach and the right partner, you can gather all the necessary evidence and use it for multiple certifications.
Automated Readiness Assessments
If your business has never been through the audit process before, you might be apprehensive about diving in. Automated compliance readiness assessments can evaluate how prepared your business is for an audit before actually beginning the process. Completing these assessments helps you get your ducks in a row, meaning the audit itself takes less time and effort. You can complete readiness assessments for many common compliance certifications, including SOC 2, ISO 27001, HIPAA, and CMMC.
The Value of Selecting the Right Audit Partner
Choosing a quality auditor is important for any compliance-focused organization, but the stakes are higher for startups. With limited resources and a lot to prove, a poorly conducted audit can be disastrous. Startups need to allocate their precious time and money to partners that can help them level up.
Here are a few things to look for when choosing a compliance vendor:
- The ability to produce actual reports and certifications. Some companies only offer software, which can help get you ready for an audit but is no replacement for the real thing. These companies farm out your actual audit to third parties. The audit they offer might be cheap, but you know what they say: You get what you pay for. Our research found that 32% of organizations have rejected a security report due to the reputation or quality of the auditor.
- A full suite of compliance services. As your startup scales, you may need to complete more audits and certifications. So, it will pay dividends down the road if you go with a vendor who can help you with many different compliance processes. Select and build a relationship with a compliance partner with your business’s future in mind.
- Experience and credibility. Your compliance vendor should have a proven track record of success and longstanding relationships with standards organizations like ISO, HITRUST, and the AICPA.
A-LIGN: A Trusted Cybersecurity and Compliance Partner for Startups
A-LIGN is a technology-enabled cybersecurity and compliance partner trusted by more than 4,000 global organizations to mitigate cybersecurity risks. Our compliance management platform, A-SCEND, combined with our audit experts offers startups and growing businesses a single-provider solution for their evolving compliance needs.
Ready to get started on your compliance journey with expert guidance? Reach out to A-LIGN today.
