Title: The Challenges Small Businesses Face in Keeping up with New Legislation
As the economy continues to grow, legislation affecting industries and businesses is being introduced more frequently. While larger companies with extensive resources for legal and compliance departments may not face challenges in keeping up, smaller companies increasingly struggle to keep up with the pace of change. In recent times, the Work Life Balance and Miscellaneous Provisions Act has been passed into law, with more new legislation to follow, such as the Automatic Enrollment Pension Savings Scheme Bill and revisions to the EU Packaging and Packaging Waste Directive. The question is: how prepared are small and medium-sized enterprises (SMEs) for these new laws, and whether they will be able to keep up with the larger companies?
Overview
New legislation regularly presents challenges for small businesses that lack expertise and resources to achieve sufficient levels of compliance. This article will delve into the reasons why SMEs struggle to keep up with ever-increasing legislation and explore some of the resultant problems. We will also look at some practical ways that SMEs can remain compliant and still thrive even with newly introduced legislation.
Section 1: The Challenges That Small Businesses Face
1.1 Limited Resources and Expertise
One of the biggest challenges that small businesses face is limited resources and expertise. Larger businesses often have a lot of resources allocated to the compliance department, enabling them to hire compliance experts, legal advisers and other specialized staff to cope with new legislation. These staff often undergo pertinent training to keep them up-to-date with new laws and policies that affect the particular business.
Small businesses, on the other hand, have limited staffing budgets and typically have to hire staff who wear various hats with multiple roles to fill, often working long hours to get the job done. As a result, small businesses may lack resources to hire specialists to deal with new laws and may not have adequate time to keep up with changes in regulation, adversely affecting their compliance.
1.2 Cost of Compliance
Irrespective of their size, businesses must comply with new legislation, and ensuring compliance can be expensive for SMEs. Compliance with multiple regulations and the transition to new systems and procedures that ensure compliance requires investments. Infrastructural upgrades might be necessary, that could mean introducing new software, hardware and equipment or reorganizing the process, incurring additional expenses, with a need to budget for staff training, legal advice etc. These costs may be too high and unattainable for small businesses faced with more stringent compliance requirements.
1.3 Increased Workload
Reviewing and implementing policy, contracts and other documentation to comply with new legislation places additional workload on small business owners and employees. The burden can be overwhelming, and this takes time away from other core business activities, affecting productivity and hampering the business’ growth.
Section 2: The Resultant Problems
2.1 Financial Problems
Small businesses with limited resources might not be able to keep up with the need to comply with new laws and regulations, and this could lead to penalties, hence incurring financial losses. Integration of new technology or adjust processes to meet these requirements might be a necessity, along with hiring experts. Nonetheless, investing in these costly upgrades might significantly impact the bottom line of small companies.
2.2 Reduced Competitiveness
Failure to comply with rules and regulations could lead to loss of business. Larger companies with deeper pockets have more capacity to comply with regulatory requirements and compete more effectively in markets. Small businesses might find that new laws place them at a competitive disadvantage, and the additional cost could make it difficult for them to serve customers as affordably as they should.
2.3 Legal Problems
Failing to comply with new laws and regulations could result in legal action being taken against these businesses. It, therefore, puts the business at risk of litigation and fines, not to mention the impact of negative publicity on the company’s reputation.
Section 3: Ways SMEs Can Remain Compliant and Thrive
3.1 Establish a Compliance Culture
Small businesses need to establish a culture of compliance internally to achieve it externally. Keeping employees up-to-date with regulation changes and aligning the company’s internal policies with external requirements is essential. Communication is necessary to ensure everyone understands their responsibilities and the company’s expectations across levels.
3.2 Budget for Compliance
Investing in compliance is crucial for SMEs. Planning ahead and budgets for compliance should be allocated and reviewed regularly to integrate new requirements. Outsourcing compliance duties to external consultants may also help to save costs.
3.3 Stay Current with Regulation
Small businesses must continually keep up with updates regarding new requirements by subscribing to industry newsletters, information portals, and other sources of regulatory information.
3.4 Use Automation
Adopting digital tools to automate standard compliance processes could mean less time is spent on manual tasks and can increase efficiency and accuracy. This could help reduce the workload on compliance departments and staff who have to ensure compliance.
Summary:
New legislation often presents many challenges for small businesses that lack sufficient resources to keep up with new regulation. These firms usually face limited budgets and inadequate expertise to comply effectively with new legislation. The cost of compliance and the workload involved are some of the problems that these SMEs face. When SMEs fail to comply, it could lead to several resultant problems, such as financial, legal, and reputational problems that could ultimately affect the company’s competitiveness.
In conclusion, small businesses can remain compliant and flourish with new regulation if they adopt proactive measures, such as establishing compliance culture, budgeting for compliance, staying updated about regulation and using automation where feasible. By adopting these strategies, SMEs can keep up with new requirements and grow the capacity to compete with larger firms while complying with regulatory requirements.
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The new laws present significant obstacles for smaller companies that increasingly lack the expertise and resources to achieve sufficient levels of compliance. Photo: Alamy/PA
David Broderick
Last month, the Work Life Balance and Miscellaneous Provisions Act was passed into law, with more new legislation for Irish businesses to follow, such as the Automatic Enrollment Pension Savings Scheme Bill and revisions to the EU Packaging and Packaging Waste Directive. It is reasonable for us to wonder how prepared small and medium-sized enterprises (SMEs) are for these new laws, and whether they will be able to keep up with the larger companies.
https://www.independent.ie/business/irish/thousands-of-small-businesses-at-risk-as-regulatory-environment-becomes-increasingly-muddy/a1124664324.html
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