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Beyond these, specific sectors will also have other rules to follow, such as licensing and permit regulations, pollution control policies, food safety, workplace safety, and more. In general, the smaller your business, the lesser your burden from compliance. That does not imply that you can afford to ignore compliance as a small business owner, though.
Larger businesses can often afford to staff entire departments with legal experts and compliance management specialists to keep the company's activities on the right side of the law, whereas SMEs do not have this luxury. Therefore, it is up to the owners and senior managers to keep the focus on compliance management. Given the costs associated with non-compliance, this is something you cannot afford to overlook in your business.
Unsurprisingly, the biggest and most immediate risk of non-compliance is that it invites legal trouble. All laws and regulations come packaged with a set of penalties that are enforced by the authorities when you don't comply. There are many different types of penalties associated with non-compliance.
Depending on the gravity of your offence, it could be something as minor as a small fine, while stiffer penalties for more severe breaches could include work stoppages, closure of your business, or even imprisonment for responsible individuals. Usually, large businesses are resilient enough to weather these sanctions. If you are a small business, however, the unwanted attention from judicial authorities can be fatal. Depending on your finances and your cash-flow situation, even a relatively small five-figure penalty could leave your organisation in dire straits. So, what areas should leaders focus on when it comes to rules and regulations? Let's take a look at some common compliance categories.
Business owners have the primary responsibility for the health and safety of everyone influenced by their work; not just their workers.
Your business must do what's reasonable to ensure the health and safety of workers and others at your work place. Consider how others, for example visitors, customers, children and young people, or the general public could be put at risk by the work of your business (for example, muscle strain while moving heavy objects, a noisy environment or presence of dust particles). You should then take action to eliminate, or where they can't be eliminated, minimise those risks. You should also explain any risks to your workers and others.
If there's an incident in your workplace involving workers or others, you should consider recording and investigating this to help you:
Identify patterns of injury or illness; and
If someone is killed or suffers a serious injury or illness as a result of work, this is a notifiable event and you must notify WorkSafe
Governance comprises the principles, practices and processes that determine how a business is directed and controlled. It’s about the checks and balances and expert advice that keep your business on track. Don’t have an advisory board or a medium or large board of directors? As a small business owner, it is up to the owners and senior managers to ensure compliance. A good place to start is to:
Understand all your duties as a director, like acting in good faith, meeting your commitments (for example, you mustn't act, or agree to the company acting, in a manner that's likely to breach the Companies Act 1993 other legislation or your company's constitution) and trading sensibly; and
Regularly review how your business is performing, using advisors or other business owners to help.
This approach to governance is less structured than having an advisory board or a medium or large board of directors — but that doesn’t mean it’s less important.
Compliance is a word every business leader faces with a bit of apprehension. The reason it’s so critical that businesses be concerned with compliance is that any lapse of business requirements can lead to a raft of issues. These will commonly impact employees, customers/clients, and overall business success. Like it or not, ensuring regulatory compliance is not only a requirement but getting more and more challenging. Knowing your compliance requirements is vital to ensure your business is meeting its obligations.
Disclaimer: This article is general in nature and should not be treated as professional advice. It is recommended that you consult your advisor. No liability is assumed by Harris Tate Limited for any losses suffered by any person relying directly or indirectly upon the article above.