Why Is Business Compliance Essential to Overall Growth?
by Francine Breckenridge, Chief Compliance and Legal Officer at U.S. Money Reserve
Compliance is often associated with corporate constraints such as laws, regulations, inspections, licensing, and audits that designate parameters of a company’s operations. While it sounds like a whole heap of no fun, the truth is that business compliance is, in fact, a critical component of both a company’s survival and its growth.
Importantly, do not dismiss compliance as a business constraint or blocker. Compliance done right will help your business grow. It works hand in hand with other aspects of the business and market to help move companies forward. In some cases, compliance can even help companies find new opportunities.
A 2015 study by PricewaterhouseCoopers shows that companies with strong comprehensive compliance plans are more likely to achieve an annual profit margin — a profit margin that improves by as much as 10 percent over a period of just three years. In highly competitive markets, that’s a tremendous number in a very short amount of time. That kind of return on investment can truly mean life or death for a company.
There are tremendous risks in not having a comprehensive business compliance strategy that works with (rather than against) other components of your business. Should a company run afoul of any regulations, rules, legislation, or laws, that company could be in for a rude awakening.
Creating a comprehensive compliance plan and executing it in a way that makes sense for your company take work but are worth the investment in the long run. Here’s why business compliance is so essential to the overall growth and long-term health of your company.
Business Compliance Reduces Business Risk
At its most basic level, business compliance is about reducing risk, both for individuals and for the company as a whole. By becoming familiar with the rules and regulations that constrain their particular business sector, companies can reduce the chance of having to pay a hefty fine or being forced to cease business activity.
Think of it this way: Every dollar spent on setting up and maintaining a clear compliance strategy is money that can free up more capital to put into things like research and development, marketing, or new hires. A consistent investment in business compliance goes a long way toward ensuring the security and sustainability of your business as it grows.
Keep in mind that as your business gets bigger, your business compliance strategy and plan need to scale as well. Allowing compliance plans to evolve as the business changes is key to continuing the growth of any company. Much like a growing child has different needs at different phases of their life, your business compliance strategy needs to meet the changing marketplace, regulatory environment, business needs, and economy as a whole in order to survive and thrive. Investing in a growth-oriented business compliance strategy is key to success.
Business Compliance Fosters Confidence
Have you ever come to a stoplight that has stopped working on a busy road? Have you noticed how it’s always a bit of a free-for-all as people make random moves at random moments? It’s almost like you can see the thoughts cross people’s minds as they hesitate, then mash the gas, hoping that no one else at the intersection has the same idea at the same time. When the traffic lights are working, everyone flows smoothly and regularly through the intersection because everyone understands the rules of the road. In contrast, when the rules break down, and stoplights stop working, things become totally disorganized, and no one knows what to do — nor do they have the confidence to cross the intersection without hesitation.
Rules, regulations, and laws are like those stoplights on a road that keep traffic (and commerce) running at a regulated, clear, and safe speed. They give people the confidence to be able to cross a busy intersection or make a clear decision and take action. Compliance offers the same kind of support to a business.
A great compliance program gives the company rules to live by so that everyone can conduct business with confidence and move forward decisively. Business today moves quickly, and it’s crucial to have an excellent compliance plan that helps employees foster the ability to make business-first decisions with confidence, which in turn can help them maximize profits with less risk to the company.
Business Compliance Can Make your Business More Efficient
In most businesses, efficiency equals profit and growth, right? When a company gets a great compliance strategy in place, it requires a lot of nitty-gritty detail work. That means closely examining processes and procedures your business currently uses to keep the company running.
During compliance audits, a company gathers a myriad of very detailed data, which clearly redefines business terminology and company workflow. That data and information can then be harnessed to make better investments as well as long- and short-term planning decisions. Once a company has all that information compiled, it can examine the data to find inefficiencies potentially costing the company valuable time or money.
Going through a business compliance audit often redefines terms and business goals. This work can help the company make far better future investment plans. Those future investments and strategies can then be tested against the new parameters to see if they make good, future-business sense. Getting clear on the rules of the road when it comes to planning and investment is one sure way to guarantee that profits grow alongside a great compliance plan.
Compliance work also helps everyone understand precisely what the goals of the company are as a whole. It can help realign the structure and goals of all departments so that everyone is moving together, like a well-oiled rowing team, to reach the same goal of growth.
Business Compliance Prevents Costly Accidents
It goes without saying that great business compliance strategies can help prevent injuries or discrimination and foster business practices ensuring the longevity of the company. Going through a business compliance audit can uncover blind spots that might represent significant risks, and that in and of itself is incredibly valuable.
Overall, a great business compliance plan can make your company safer.
The Soft Benefits of Great Business Compliance
Great business compliance also offers a number of “soft benefits” to a company. These benefits are in areas that might not necessarily directly impact the bottom line, but problems that crop up in these spaces can significantly detract from the success of a business. These benefits can include everything from great public relations and media attention to better customer relations and employee retention. It’s important not to overlook these benefits even though they may not have a measurable, direct-line dollar impact.
For one, customers always like to know that the company they have chosen to spend their hard-earned cash with is not doing anything illegal or running afoul of the law in any way. It makes good marketing and public relations that much easier. Consider investing in compliance as a way to ensure that your company continues to foster goodwill amongst the public, which in today’s day and age can be a huge market advantage and in turn can yield more profits and growth.
Additionally, internally, your employees have clearer guidelines for their own work and behavior. After all, no one wants to work for an unethical company that is doing illegal things, right? Everyone wants to feel that their work matters and that it makes the world a better place in some way. By having a clear business compliance strategy, companies help employees operate with confidence, knowing that the company they have chosen to work for is striving to stay on the right side of the law, has good solid ethics, and adheres to regulations.
The Bottom Line on Business Compliance and Growth
There’s no question that a good compliance strategy will help a company stay on the right side of rules and regulations, but it can also considerably boost the bottom line. Without rules of the road, a business runs the risk of significant problems and costs as a result of legal issues, among other things. Compliance encourages confident decisions, aligns profits and cash with company goals, prevents major accidents, improves public relations and marketing, and ensures the hiring and retention of the best talent.
At first blush, business compliance can seem restrictive to creativity and innovation. Yet when done right, business compliance strategies can foster tremendous growth and smart investment. They can work hand in hand with really innovative and creative work. By getting a great compliance strategy in place, moving through a comprehensive compliance audit, and realigning business functions and employees with the core mission of the company, you can ensure that your business both stays on the right side of the law and grows and flourishes in the long term.
Simply put, business compliance makes good business sense because it is closely linked to growth and profitability. Invest in your business compliance strategy, and you are sure to reap the rewards well into the future.
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