Mike DeKock, Founder and CEO at MJD Advisors
As cybersecurity takes center stage for companies across every industry, leaders are prioritizing vendor oversight to feel confident in their partners’ data security practices. As such, businesses are expecting SaaS and other third-party services to emphasize both quality and optimal data protection.
Tech founders have taken notice, looking for ways to improve their security program and demonstrate it by completing a SOC 2 report or ISO 27001 certification, among others. However, compliance doesn’t always make the cut in the early stages of building a business because founders might have competing priorities. But the reality is different: Focusing on compliance and partnering with auditors from the start can be a competitive advantage, opening doors to opportunities early on.
Thankfully, the industry has taken tremendous steps forward in recent years. Compliance practices have made a 180-degree pivot through digital transformation and niche CPA firms, minimizing the growing pains of audits and capitalizing on modern software development. By taking advantage of the upgrades in compliance processes, founders can easily and confidently make it a priority.
Let’s dive into the industry’s recent technological shift and the business advantages of adopting compliance early for startups.
Getting a Head Start on Compliance
Early-stage startups might find it difficult to see the benefits of compliance from the onset. The legacy reputation of compliance as time-consuming, expensive, and difficult adds to the tight budgets and other constraints founders must grapple with.
However, time and experience show that adopting data security practices before a company starts expanding can help it become more resilient and trustworthy to its clients and forge strong and long-lasting partnerships.
For example, we had the case of a smaller and newer digital products startup that wanted to compete with more mature organizations. Upon completing a SOC 2 report, they began getting included in conversations with bigger companies as their commitment to security practices showcased their readiness to deliver bigger results.
But when should your compliance journey start? Ideally, you should connect with auditors as soon as they have a business model and a customer base. By building a relationship with an auditor early on, founders can build a security program customized to their business and the needs of its customers and avoid surprises.
This also enables you to build compliance into your company culture; right from the outset, you understand the benefits of becoming security-aware and implement this mindset in every aspect of your business. For example, auditors can help you adopt best practices like calendaring and documenting access and firewall reviews, scheduling security team meetings, and creating and documenting policies for onboarding and offboarding employees. These processes will make audits go much more smoothly.
Enabling Significant Business Deals
Companies often miss out on important deals, like their first large contract, because they don’t meet the data security requirements enterprises are looking for in their vendors or lack the means to show them. Compliance examinations like SOC 2 reports or ISO 27001 certifications are designed to fulfill these requirements.
Such reports and standards are increasingly becoming a major business enabler. Clients are vetting company practices more carefully before doing business, so this is your opportunity to secure deals by demonstrating a robust security program.
Providing SOC 2 and related reports can also streamline the vetting process for potential clients, replacing security questionnaires with your compliance story. Ultimately, focusing on compliance as part of your business strategy can increase positive perceptions of your company. Showcasing your commitment to data security from the beginning can help attract more clients, partners, and investors.
Refining Internal Processes From The Beginning
In the fast-paced startup environment, founders might lose sight of minor but significant details that accommodate regulatory frameworks or security practices. Kickstarting compliance early helps embed a compliance culture into your business amid hectic schedules and the quest for growth.
For example, compliance can be a gateway for alignment and accountability when it comes to decision-making and operations. In the rush to make plans as you go, an auditor can be a sounding board to uncover areas of improvement you could be overlooking. This might sound counterintuitive given the slow pace compliance has been known for. However, the industry is evolving to meet the needs of tech companies, leveraging software tools that streamline processes and make for more seamless, targeted audits.
These tools range from platforms that automate the monitoring process and reduce the need for security questionnaires to tethering compliance programs to your company platforms to have a clearer picture of your operations. These new practices save time, giving auditors more space to ask you worthwhile questions and learn about your needs and those of your clients on a deeper level.
Modern compliance firms that specialize in SOC 2 reports personalize the examination for each client rather than use a standard list of “auditor requirements.” The SOC 2 framework is flexible, which allows for customization and provides real insights into your security program.
Today’s auditors bring business value beyond examining your company to fulfill a security requirement. Their tech knowledge from adopting industry tools, lived experiences from working with other industry players, and familiarity with the latest regulations are important assets for your company in its early stages.
The compliance industry is making strides to improve its auditing process so businesses can grow from fulfilling security frameworks rather than slow down. Working with an auditor from an early stage means you’ll start from a place of compliance rather than make significant changes once higher stakes are at play for your company. Not only are these specialized auditors knowledgeable about tech, but they’re also inclined to honor your startup’s needs and help you build a robust security program best suited for your business.