By Ginen Moodley | Director of Moodley Attorneys
In the dynamic world of small and medium-sized businesses (SMMEs) and startups, compliance is often seen as a burdensome obligation rather than a strategic necessity. For many entrepreneurs, especially those with limited resources, the process of adhering to legal regulations can feel like a drain on both time and finances. However, fostering a culture of compliance within an organisation is essential for long-term growth, stability, and reputation.
Compliance can often be perceived as a “tick-box” exercise. The sheer volume of regulations — from the Protection of Personal Information Act (POPIA) to the Companies Act, tax obligations, and industry-specific regulations — can overwhelm a business that is trying to establish itself and grow. For many SMMEs, this means that compliance is relegated to a back-office task, done reluctantly to avoid penalties, rather than an integral part of business operations.
However, neglecting compliance can be a costly mistake. It can expose businesses to legal risks, financial penalties, reputational damage, and in some cases, closure. In today’s increasingly regulated environment, business owners must understand that compliance is not just about avoiding legal trouble — it’s about building trust with customers, investors, and stakeholders.
The key to managing compliance effectively lies in embedding it into the company’s culture from the outset. When compliance becomes a core part of how the business operates, it is not just the responsibility of the legal or finance teams but a shared goal across the organisation.
Here are several strategies that businesses, particularly SMMEs, can use to cultivate a culture of compliance:
1. Make compliance a part of your business strategy
Compliance shouldn’t be seen as a separate function or afterthought; it should be woven into your business strategy. From the first day of operations, businesses must consider compliance as a foundational element that impacts everything from marketing to employee conduct, data management, and customer relations.
By proactively including compliance in business planning, companies can create a sustainable approach to managing regulatory requirements. This includes setting up systems that can easily adapt to changes in the law and ensuring that all key stakeholders are aware of their responsibilities.
2. Simplify the compliance process
One of the biggest challenges for SMMEs is the complexity of compliance. Small businesses often lack the infrastructure or the personnel to handle extensive paperwork or intricate legal processes. To mitigate this, businesses should simplify their compliance frameworks.
This can be achieved by:
- Automating processes: Invest in software that helps automate compliance tasks such as data protection (for example, automating personal information audits for POPIA compliance) or employee record-keeping.
- Utilising external advisors: Consider outsourcing to compliance experts, such as part-time CFOs or legal consultants, who can manage regulatory obligations without the need for full-time hires.
- Leveraging templates: Use industry-specific templates and guides to create simple, effective policies that can be tailored as your business grows.
3. Train and educate your team
For a culture of compliance to take root, it must start with education. Regular training on compliance obligations, ethics, and risk management should be provided to all employees. Staff at every level should understand the importance of compliance and how their actions directly impact the company’s legal standing and reputation.
Additionally, creating open channels for discussing compliance issues and concerns helps foster a transparent culture where employees feel empowered to ask questions, raise red flags, or report potential risks.
4. Integrate technology and innovation
With the rise of new technologies, businesses now have more tools than ever to streamline compliance processes. For instance, blockchain technology and smart contracts can revolutionise how businesses handle agreements, ensuring transparency, security, and compliance in real time.
Implementing such technologies can:
- Simplify contract management and reduce the risk of human error.
- Automate compliance checks and ensure consistent application of regulatory standards across the business.
- Improve transparency in transactions, making audits more efficient and reducing the potential for fraud.
5. Stay agile and adapt to change
Regulations are constantly evolving. For instance, in South Africa, the Protection of Personal Information Act (POPIA) introduced new standards for data protection that businesses need to be constantly aware of. Being agile and adapting quickly to changes in the regulatory landscape is vital for maintaining compliance.
This means staying up-to-date with legal developments and regularly reviewing your compliance procedures. Businesses should invest in tools or partnerships that allow them to monitor changes in law, so they can adjust swiftly without being caught off guard.
6. Case Studies
Noncompliance can result in the wheels falling off. We are dealing with a matter whereby our client disputes the computation of workmen’s compensation which has resulted in a year of fighting without finalization. This has led to business disruption as a letter of goodstanding is fundamental to meeting tender requirements almost bringing the business to its knees. Another trading entity had to be established to ensure that the business continues whilst the dispute remains ongoing.
Last year we had a client in a panic, as the Department of Labour decided to attend their premises and conduct an audit. Fortunately all was in order.
Having to deal with these time consuming tasks detracts from running the business. When things are in order however, you feel that these measures are safeguards for sustainability. In addition, these signals of compliance build trust with the client and open doors for larger opportunities.
Turning compliance into a business asset
Ultimately, when compliance is properly managed, it can be turned into a competitive advantage. It enhances trust with customers, builds a positive brand image, and improves relationships with investors and regulators. Businesses that make compliance part of their culture are likely to be seen as more reliable and responsible — qualities that appeal to clients and partners alike.
For SMMEs, compliance doesn’t have to be a daunting task. By embracing it as a core part of your business practices, simplifying processes, and leveraging technology, compliance can be transformed from an obstacle into a tool for growth and success.
