Whether it’s GDPR or the copycat regulation that followed, startups must understand and comply with complex data protection laws. Failure to do this properly means fines, reputational damage, and, potentially, the business itself being shuttered.
This article takes all of our experience at Crown Records Management to explore steps that you can take to ensure your startup or small business is (and remains!) data compliant.
“What do you mean by data compliance?”
This is the first and most obvious question. The answer?
“Ensuring that your company’s data practices adhere to data regulations.”
These laws are designed to protect personal and sensitive data, and non-compliance can result in serious penalties.
For startups and smaller businesses, data compliance was sometimes overlooked in favor of growth. In the 2020s, the risks of non-compliance are too significant to overlook anymore. Not only could your startup face financial penalties, but customer trust would also be on the chopping board, and that trust is what delivers future growth.
While the EU’s General Data Protection Regulation (GDPR) is one of the most well-known data privacy laws, and likely the one you’ve already heard of, it’s important to remember that there are many other regulations globally.
The California Consumer Privacy Act (CCPA) in the U.S., LGPD in Brazil, and PIPEDA in Canada all have their own data protection requirements, for example. If you’re operating in or aim to operate in multiple markets, you need to be mindful of these but it’s also worth noting that GDPR forms the “gold standard” of data privacy regulation.
This means its principles are heavily replicated in other national or transnational regulation. “Data localisation” (ensuring that copies exist within the national jurisdiction), ensuring the “explicit consent” of the customer/data provider etc are generally found in all legislation of this type, as of 2024.
What are the key regulations around the world?
As stated, GDPR is the template for much of the world’s in-discussion or in-force data protection law post-2018. However, it still helps for you to familiarise yourself with what exists, where, and what it means.
- GDPR (Europe): The GDPR governs how companies collect, store, and process personal data of EU residents. Non-compliance can result in fines of up to 4% of annual global turnover or €20 million, whichever is higher.
- CCPA (California): The California Consumer Privacy Act provides residents of California with the right to know what personal data is collected, request its deletion, and opt out of its sale. It also imposes hefty fines for violations. Note that the CCPA is complemented across the U.S. now in data-privacy legislation in over 20 states. Learn more here.
- PDP/DPDP (India): India’s Digital Personal Data Protection Act is India’s current-generation data-protection bill. Having entered force this year (2024), it contains most of the provisions that GDPR does, with some changes. Learn more here.
- LGPD (Brazil): The Lei Geral de Proteção de Dados is Brazil’s answer to GDPR. It regulates how companies must handle the personal data. Learn more about Latin American data-protection law here.
- PIPL (China) The Personal Information Protection Law in China harmonises existing data-protection law and brings it into the GDPR era. As of 2024, there is now a governing authority for data protection and privacy too. Understand the specifics in our guide, here.
What can I do to ensure compliance, given I’m a small organisation/startup?
If you’re resource-strapped it’s understandable that a maze of impenetrable legalese will seem daunting, but it’s also very achievable. Remember! While the legal language may seem scary, a lot of data-privacy compliance is essentially just common-sense best practice for a digital age:
- Data Mapping: Begin by understanding what you collect, where it’s stored, how it’s used, and who has access to it. The main output here is risk assessment, you want to audit potential risks or vulnerabilities in your data-handling processes. You can do this manually as a startup: e.g. seeing how your financial statements are shared by email, looking at what you’re printing on a regular basis, or alternatively, there are tools that can be used.
- Develop a data-privacy policy: Sometimes called, or part of an “Information Governance Policy”. This will depend slightly on the type of business you’re running (e.g. B2B/B2C). However, every startup needs a data privacy policy that explains how they handle personal data, including how they collect, store, and protect it.
This should also include a plan for responding to data breaches, which is required by several regulations, including GDPR. Also see our How-To Guide on creating an Information Governance Policy.
- Data Minimisation: Collect only the data that is necessary for your business operations. Excessive data collection increases your risk and makes compliance more difficult (it also increases your cloud-based overheads and carbon footprint!). By practicing data minimisation, you can simplify compliance and reduce risk in one fell swoop.
- Security measures: This one is more basic and should be being done already. Many regulations require companies to implement strong security measures to protect personal data. Encryption, access controls, and secure cloud storage are some of the key measures to consider. Learn more about data security best practices.
- Employee training: Perhaps the most important step on this list: Compliance isn’t just an IT issue. Everyone in the company needs to understand the importance of handling data correctly. Regular employee training can prevent unintentional violations of data regulations and reinforce best practices for data privacy. Making it part of onboarding employees as you grow can also make sure you’re doing what you need to do from the moment they start working.
What are the costs of non-compliance?
Here’s why the cost of non-compliance can be far more damaging than just a fine:
- Reputational damage: Data breaches or non-compliance issues can be very public and damaging to a company’s reputation. As stated at the beginning, trust is a critical component of growth (especially for startups) and any indication you’re not doing your due diligence as an organisation can result in the loss of customers.
- Operational disruptions: Being found non-compliant can also lead to operational disruptions. Regulators may impose restrictions or require companies to implement corrective measures. Costs of this aside, it greatly hampers any startup plan.
- Legal costs: In addition to fines, non-compliance can also result in civil suits (something that is becoming more common now legal precedent is being set down).
For startups, data compliance is no longer optional, some legislation still offers non-enforcement windows for organisations small enough to merit it, but global regulations are tightening every year. It’s essential to prioritise data protection from day one.
