I’ve written about the need for startups to lay a solid foundation when building their business, similar to the way you build a new house. For a business, that foundation rests on three key principles: compliance, employee well-being, and accountability. In this post, I’ll look more closely at compliance and how to ensure a balance between protecting the rights and interests of your employees and maintaining the regulatory standards required within your field of work. Compliance might not be the most thrilling aspect of starting a business, but it's undeniably critical to get it right. It ensures that you safeguard your business from legal challenges and instills confidence in employees, customers, investors, and partners. Compliance should be a top-of-mind priority for the vast majority of new businesses, simply to ensure that they’re on solid legal ground within their jurisdictions. For example, an organization receiving a grant from the National Institutes of Health may need to take steps to ensure they’re compliant with requirements to maintain a drug-free workplace, which probably isn’t intuitive. 50 Different Ways to Do Things Various industries have their own rules, and each state has its own employment laws – some stricter than others in what they require from employers. It's essential to be aware of these laws and stick to them. Some states require you to pay within 10 days of the end of a pay period, while with others, it is 15 days—and some offer you option to pay monthly but require you to pay by a certain date and include days not worked yet. And don’t get me started on the rules and regs related to how you need to handle an employee who is leaving your company! Compliance is not just about legal adherence to national and state-level requirements that govern employment and hiring. It also includes important considerations related to operational policies, leaves of absence, and general standards of conduct—all of which help set the tone of the culture you’re trying to build within the organization. In short, a thoughtful approach to compliance ensures the stability and credibility of your startup and should be thought of as a critical base layer that will enable well-being and accountability. Let's look at a checklist of some of the questions that can help you assess your approach to this important topic. Checklist: Questions to Ask Yourself about Compliance: 1. What is our organizational tolerance to risk? Answering this question will help guide your development of policies and standards, as well as how you’ll enforce them within the organization. For example, what is the balance between trust and structure you’d like to strike, and what risks might you take on as a result? Are they managable? 2. Do I know and understand industry-specific, national / state, and customer requirements that are applicable to my business? Some startups will find this easier to answer than others, though we always recommend that our clients bring in legal and/or HR experts to help with. You want to be sure on this one! 3. Have we created policies and standards, and communicated them to the business? In our work with startups and early-stage companies, we generally find this work has been done by a non-HR employee, typically someone with a Finance or Operations background. While the work is solid, there are often critical holes that develop and cause pain or unnecessary exposure as the organization grows. 4. Do we have a process for regularly updating compliance protocols as regulations evolve? You’ve nailed #1-3, time to sit back and relax – right? WRONG! States and the federal government often change regulations regularly throughout the year, so developing a process to keep up with the pace of change annually is just as important as setting your compliance infrastructure up in the first place. Compliance might seem like just another bureaucratic hurdle, but it's the shield that protects your startup. Proactively addressing compliance will pay dividends as you grow and scale and ensure you can hold yourself accountable along the way.

Jimi Hendrix memorably put it, “Castles made of sand will fall into the sea eventually.”

It's crucial for organizations, particularly smaller enterprises, to understand the limitations of emulating iconic business figures like Elon Musk and Steve Jobs.

Greg Griesemer spoke with David Barnett on the Small Business and Deal Making Podcast.