It is widely known that 90% of startups fail within five years. Although most startups fail, there is no dearth of new startups. Surely, your startup will succeed where others have failed. But instead of relying on blind faith, what if you could do something to improve your startup’s chances of success?

One of the top five reasons for startup failure is regulatory and legal challenges. So if you embraced a compliance-first approach from the beginning, your startup would have much higher chances of success. But compliance isn’t just a legal necessity; it's a strategic move that can protect your business, enhance its reputation, and provide a solid foundation for growth.

So for any startup that is serious about long-term sustainability, compliance can’t be an optional project. It must be treated as a source of competitive advantage. To help you gain this advantage, I am sharing the steps that help prepare your startup for compliance.

The steps listed below are based on our firsthand experience of achieving SOC 2 compliance as well as IT services rendered to our customers in their pursuit of compliance such as SOC 1, SOC 2, HIPAA, etc.

How To Start Preparing For Compliance

While there are many different regulatory compliance and certifications that businesses are required to comply with or may voluntarily choose, there is a fair bit of overlap in their requirements. So no matter which compliance you are aiming for, the following steps will hold.

1. Research Your Compliance Needs

The very first step, before anything else, is to understand the specific compliance requirements that apply to your industry and location. Some regulations are mandatory, without which you will not be able to operate, while some standards and certifications are optional.

Once you have researched and prioritized the requirements, you will need to develop a general outline of how you intend to meet the requirements. At this stage, you don’t need a detailed plan but only an outline that will help guide your strategic decisions regarding infrastructure, operations, data protection, and security.

It is a good idea to consult a compliance expert or legal counsel to ensure that you are headed in the right direction.

2. Invest In The Right Technologies

As a startup, especially after your Series A, your business will experience significant growth and your infrastructure will have to keep pace to adequately support this growth. With an understanding of industry and location-specific requirements, you can build a tech stack that will support your current as well as future compliance needs.

Starting with the right tech from the beginning will save you the time and money required to migrate your tech later on. One of the key considerations when choosing a technology, software, or application is its ability to furnish reports necessary for audits. Most of the compliance, standards, and certifications rely on third-party audits that require extensive reports, especially for critical security controls.

At this stage, some of the key areas you need to invest in include your network stack, data security, endpoint security, device management, and access management. I have talked about building an ideal tech stack for startups in an earlier blog post. You can access it here: The Tech Stack For Running The Most Efficient IT Operations.

3. Conduct A Risk Assessment

The next step involves identifying the threat and the security measures necessary to deal with those threats. This is achieved by conducting a cybersecurity risk assessment. The results of such an assessment will help you to identify, analyze, and evaluate the risks of your IT systems getting compromised by cyberattacks.

The assessment empowers you to make informed decisions about cyber risks, ensuring that the defenses and security controls you establish are appropriate for the threats your business faces.

Without a thorough security risk assessment, it would not be possible to get an accurate idea of the threats the business faces and the security measures that are best suited as well as best fit your business's needs.

Here’s a quick overview of the steps involved in performing a security risk assessment:

1. Identify assets

2. Identify threats & vulnerabilities

3. Access the current security state

4. Evaluate risks

5. Assign ownership

6. Document the results

We have covered this in greater detail in an earlier blog post that you can access here: How To Perform A Cybersecurity Risk Assessment

4. Write Policies That Mitigate The Identified Risks

Now that you have identified the risks, it's time to begin writing policies to address those risks. The IT policies that you create represent an administrative control that helps mitigate security risks. In addition to administrative controls, the policies must also encompass physical controls such as access restrictions, security guards, and security camera systems, and technical controls such as firewalls, antivirus software, VPN, etc.

Your policies need to address security risks adequately, so you must ensure that they are clear and specific or you’ll face difficulties during third-party audits. In certain cases, for example, if you are aiming for a SOC 2 Type 1, writing policies that adequately address risks is all that is required.

Here’s a list of security policies that are commonly required by organizations:

• Purchase And Installation Policy

• Acceptable Use Policy

• Password Policy

• Network Security Policy

• Security Awareness and Training Policy

• Incident Response Policy

• Data Security Policy

• Asset Management Policy

• Access Control Policy

• Remote Access Policy

• Change Management Policy

For a comprehensive guide on creating your IT Security Policy, check out our blog post How To Write An IT Security Policy

5. Implement Security Controls

With the policies in place, you can start implementing security controls that address gaps and vulnerabilities, remediating any issues that may block you on your compliance journey.

If you have adopted a compliance-first approach, you will simply be mitigating risks that have already been identified in the earlier step and as codified in your policy documents. Remember when we talked about investing in the right technologies earlier? That comes in really handy here. And you will have most if not all of the required security controls and reporting in place.

However, if you haven’t paid enough attention to compliance from the get-go, you will likely need to implement new systems or controls to conform to the newly written policy. In simple cases, you will need to upgrade existing systems to a more advanced version, which is not a big deal. But in more critical cases, you will need to completely overhaul existing systems and implement entirely new controls such as Mobile Device Management (MDM ), Identity and Access Management (IDM), or Antivirus Software that meet your elevated security needs.

6. Establish A System For Gathering And Retaining Evidence Of Your Controls

While putting policies in place and remediating issues that conflict with your policies may be sufficient for some compliance, for others they are not. More stringent compliance, standards, and certifications require you to demonstrate that you are conforming with your policies. During external audits, you will have to provide evidence to prove that you’re enforcing your policies. So, you need a system for collecting evidence relating to your SOC 2 controls.

Gathering and retaining evidence of your security controls is quite an onerous task. Thankfully, there are solutions available that continuously monitor and collect evidence of your organization's security controls, while streamlining compliance workflows end-to-end to ensure audit readiness.

At Jones IT, for our SOC 2 Type 2 compliance, we use several workflows for collecting and storing evidence of our security controls in preparation for our annual audit. The top two of these that we would recommend are:

1. Drata

2. Vanta

7. Establish A System For Regular Audits And Remediation

The final step of the process is to repeat the process. Your tech stack, business processes, and threat landscape are constantly changing. So you will need to regularly review your security controls and their effectiveness in mitigating risks and document the findings.

The subsequent iterations of the compliance preparation process will not be as rigorous as the first one. It will likely consist of regular meetings within various departments, which have expertise over the relevant controls, under the supervision of the administrative team. These meetings will lead to an increasingly improved understanding of the risks that your organization faces and the controls necessary to mitigate those risks.

Conclusion

Startups with a strong security posture are better positioned to succeed. Nothing demonstrates your organization’s commitment to security and data protection better than compliance with regulatory as well as industry standards.

Compliance is not just a legal requirement but is, in fact, good for business. It helps you enhance security, earn your customers’ trust, and forge partnerships. It’s never too early to start preparing your startup for achieving and maintaining necessary compliance.

Getting your business ready for a compliance audit is a mammoth project. We have helped many of our clients achieve and maintain their SOC 2 compliance. If you are interested in talking to us about risk assessment and audit preparation for SOC 2, HIPAA, or any other compliance, reach out to us by clicking the button below.

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