𝗖𝗼𝗺𝗽𝗹𝗶𝗮𝗻𝗰𝗲 & 𝗥𝗲𝗽𝗼𝗿𝘁𝗶𝗻𝗴 - 𝗪𝗵𝗮𝘁 𝘁𝗼 𝗞𝗻𝗼𝘄 𝗶𝗻 𝘁𝗵𝗲 𝗙𝗮𝘀𝘁 𝗟𝗮𝗻𝗲
People watching races want to see the competitors go as fast as possible and eagerly await the winner.
Experts know to consider the course conditions, rules for the race, and safety gear to not only triumph but also to race again.
The winner of the race embraces the track to go fastest
While compliance and reporting may not be as exciting as a race, they support the larger interest of ongoing competition.
𝘕𝘰𝘵𝘦: this post should not be used as legal advice. Seek expert advice to meet your specific needs.
𝗪𝗵𝘆 𝗖𝗮𝗿𝗲 𝗮𝗯𝗼𝘂𝘁 𝗥𝘂𝗹𝗲𝘀 𝗮𝗻𝗱 𝗥𝗲𝗴𝘂𝗹𝗮𝘁𝗶𝗼𝗻𝘀?
At their best, rules and regulations serve to create a reasonable and safe environment for business growth. Keep in mind:
· Best Practices – Rely on strategy and efficiency to disrupt markets, and push on the rules to prompt innovation
· Client Requirements – Know how an industry works properly to focus on value proposition and negotiation
· Exit Preparation – Install the right policies and practices now to confidently approach investors and acquirers later
𝗪𝗵𝗮𝘁 𝗮𝗿𝗲 𝘁𝗵𝗲 𝗖𝗼𝗻𝘀𝗲𝗾𝘂𝗲𝗻𝗰𝗲𝘀?
Although enforcement can be burdensome, improper compliance and reporting leads to some severe consequences:
· May delay/derail a funding round, debt financing, or an exit plan
· In some cases, the lack of compliance is unfavorably factored into a funding round
· Fees and penalties can cost the business, and even can impact you personally
Compliance may require work but prevents major issues later.
𝗛𝗼𝘄 𝘁𝗼 𝗔𝗽𝗽𝗿𝗼𝗮𝗰𝗵 𝗖𝗼𝗺𝗽𝗹𝗶𝗮𝗻𝗰𝗲?
𝙂𝙤𝙡𝙙𝙞𝙡𝙤𝙘𝙠𝙨. Some people ignore these matters (e.g. first-time founders who have yet to see any consequences) and others become obsessed (e.g. people from a large corporate environment).
Find the middle road. Talk with attorneys, founders, investors, and advisors to understand the potential consequences. You may decide to tackle compliance in steps between now and future rounds.
𝘼𝙪𝙙𝙞𝙩𝙨. They're draining but reconsider the process as a learning opportunity.
Having an outsider question your process, results, and impact can prepare you to reach the next level. For instance, a financial audit may reveal issues you can address before your next round.
𝙒𝙚𝙡𝙡-𝙧𝙤𝙪𝙣𝙙𝙚𝙙 𝙏𝙚𝙖𝙢. To reach success, you surely need mavericks and creatives. You also need someone minding the business.
Minding rules and regulations now will establish trust and demonstrate competence benefitting your expansion.
With compliance, address what’s necessary now and carefully plan for building processes based on demands and resources.
Your startup will face many trials. Race cars have maintenance and equipment checks to ensure they speed away safely every time.