Attention small business owners: if you had to choose, would you characterize your daily business practices as proactive or reactive? Of course, we recognize that often this is not a binary choice and that your business practices likely fall somewhere in the middle.

In our law firm practice, we advise our corporate clients every day about compliance best practices and how businesses can avoid the pitfalls of regulatory or law-enforcement scrutiny. And as outside counsel for many small businesses, we like our clients to stay (at least) one step ahead of the regulators, one step ahead of the next possible lawsuit, one step ahead of the disgruntled employees or customers who are contemplating litigation against our clients.

Last month we spoke about being proactive as opposed to reactive in your personal legal matters and that mindset applies with equal measure to small businesses. This month we strive to highlight how both large and small businesses can position themselves proactively in whatever business environment they operate in. To that end, we pose the following non-rhetorical questions to our business owners in the community to get you thinking about whether you too are staying at least one step ahead.

  • When is the last time you trained your employees? Last week? Last year? Training is a critical component of strong internal controls and can also offer a credible defense to certain problematic conduct in the workplace.  In other words, if you meaningfully and consistently train your employees regarding company operations and relevant laws and regulations, such training can potentially insulate you from liability if one of those trained employees goes rogue.  Training is key and should be implemented on a regular basis.
  • What is the culture of your organization? As has often been said in legal and compliance circles, “culture eats strategy for breakfast.” In other words, you can strategize all you want about business operations but at the end of the day company culture often is a better barometer of success.  Is the culture you are promoting inclusive and collaborative and visionary ? Do you expressly signal that harassment and discrimination of all forms will not be tolerated and that advancement in the company will be based strictly on merit?  Think about the culture you are promoting on a daily basis and tweak it from the top down if the answer to the above questions isn’t a resounding “yes!”
  • Do you interact or intersect with government agencies or regulatory officials in the course of your business operations? If so, do you have an intimate knowledge of the legal and regulatory frameworks within which you operate and if not, how can you get smart on that? Do you have in-house or outside counsel that can help familiarize employees with these frameworks to mitigate risk on an ongoing basis?  If not, that is a worthy discussion to undertake before you get in trouble.
  • Are you properly securing confidential and proprietary information? Do your employees know that they shouldn’t be taking home confidential information or storing proprietary documents in their trunks of their cars? Do you signal to your employees that the protection of a client’s personal information is a top priority for you?  Is your technology up-to-date and adequate to protect against computer intrusion? Of course, you cannot always prevent computer hacking but you can signal to your employees and customers that you take these issues seriously so as to make your business a hard target against these threats.


DISCLAIMER: The information on this page is provided for informational purposes only and should not be construed as legal advice or acted on as such. The content on this page may not reflect current legal developments or address your situation. It does not create an attorney-client relationship or provide guarantees or endorsement of behavior and is not a substitute for obtaining legal advice from an attorney on a particular legal matter.