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Launching a startup is exciting, but it also comes with challenges that extend far beyond finding customers or setting prices. One area that many new business owners overlook is IT compliance. Ignoring industry regulations, licensing rules, or security standards can result in penalties, lawsuits, or even a shutdown. In fact, noncompliance is one of the leading causes of startup failure, second only to poor financial management.
The financial impact is no small matter. Globally, the average cost of noncompliance is nearly $15 million—a devastating hit for young companies already working with limited budgets. To help new businesses avoid this pitfall, here are practical steps to build a strong compliance foundation.
1. Build Essential Security and Compliance Measures in Year One
The earlier you establish compliance practices, the easier it becomes to scale securely as your business grows. Putting the right systems in place during your first year can protect your reputation, minimize risks, and save money down the road. At a minimum, startups should focus on these six areas:
- Centralized Device Management: Use tools like Intune or JAMF to enforce policies across all company devices. Features like strong password enforcement and multi-factor authentication help eliminate basic vulnerabilities.
- DNS Filtering: Prevent employees from visiting harmful websites or downloading unapproved tools. DNS filtering reduces exposure to phishing attacks and keeps your network safer.
- Endpoint and Managed Detection: As cyber threats become more advanced, traditional antivirus software isn’t enough. Endpoint Detection and Response (EDR), supported by Managed Detection and Response (MDR), provides continuous monitoring and rapid action against suspicious activity.
- Security Awareness Training: Human error remains one of the biggest risks. Regular training programs, especially those that simulate phishing attempts, help employees recognize and avoid common traps.
- Application Whitelisting: Prevent staff from installing unauthorized software. By restricting downloads to approved applications only, you reduce the chances of malware infecting your systems.
- Security Operations Support: Technology alone won’t keep your business safe. A dedicated security operations team—whether internal or outsourced—monitors activity, investigates threats, and acts quickly during incidents.
2. Take a Proactive Approach to Compliance
Treat compliance as an investment, not an afterthought. Addressing it early is less expensive and less disruptive than trying to fix issues under tight deadlines later. By planning ahead, you can align compliance requirements with your company’s growth instead of scrambling to make changes after regulations have already caught up to you.
3. Scale Your Compliance Efforts as You Grow
What works for a five-person startup may not hold up once you reach 50 or 500 employees. Compliance frameworks vary by industry—healthcare organizations must follow HIPAA, defense contractors must meet CMMC standards, and financial firms face their own regulations. Staying ahead of these evolving obligations is crucial.
Many startups turn to Managed Service Providers (MSPs) for help in navigating this complexity. An MSP typically assists by:
- Assessing your current compliance status
- Identifying gaps that could lead to risks or violations
- Creating a roadmap tailored to your industry and business size
As Ryan Sutton, President and CEO of Kinetix, puts it: “At some point, nearly every company must meet compliance requirements—whether to maintain operations or secure new opportunities. Without compliance, doors to certain clients or markets may remain closed.”
How MSPs Streamline Compliance Management
Compliance Assessments: By conducting in-depth reviews of your IT environment, MSPs can show where you stand today and what changes are needed to align with regulations.
Implementation of Solutions: From access controls to multi-factor authentication, MSPs put the right tools and policies in place to strengthen security and meet compliance standards.
Clear Timelines: Achieving full compliance typically takes six months to a year, depending on your industry, budget, and level of commitment. Faster progress is possible if resources are allocated effectively, but even gradual improvements move your business closer to its goals.
Final Thoughts
For startups, compliance is more than a box to check—it’s a safeguard for growth and stability. By putting strong systems in place early, taking a proactive approach, and leaning on expert support when needed, young businesses can reduce risks while setting themselves up for long-term success.
