Why should founders care about compliance?
- Missed Chances: 29% of firms drop deals if they lack compliance papers.
- Trust from Buyers: 85% of buyers look at data safety before they buy.
- Funding Stops: Not following rules can stop getting money from investors.
- Steer Clear of "Compliance Debt": Ignoring rules early may cost more later.
Main Rules to Know:
- SOC 2: Looks at safety, privacy, and trust in operations. Costs $20,000–$100,000.
- HIPAA: Must for U.S. health data (PHI).
- GDPR: Keeps EU folks' data safe. No follow can cost up to €20M or 4% of global sales.
- ISO 27001: World rule for info safe keeping. Costs $30,000–$150,000.
- PCI DSS: A must for credit card data safety.
Key Words Every Founder Needs to Know:
- GRC (Governance, Risk, Compliance): Ties business aims with risk checks.
- Audit Trail: Logs steps for clear and legal follow.
- Risk Assessment: Spots and cuts the chance of threats.
- Third-Party Risk: Possible threats from others or outside teams.
Basic Compare:
| List | Main Point | Place | Must-Have? | Price |
|---|---|---|---|---|
| SOC 2 | Safe & Trust Work | North America | No | $20,000–$100,000 |
| HIPAA | Health Info (PHI) | United States | Yes | Changes by setup |
| GDPR | EU Folks' Data Safe | EU/Global | Yes | Changes by setup |
| ISO 27001 | Info Safe | All over | No | $30,000–$150,000 |
| PCI DSS | Card Data Safe | All over | Yes | Changes by money in |
Key Point: You must follow rules - not just to grow and earn trust, but to dodge big mistakes that cost a lot. Use tools like GRC systems and expert help (like a Virtual CISO) to make following rules easy and keep your business safe.
SOC 2 Compliance for SaaS Startups & Top Pitfalls to Avoid | Raghu (Co-Founder, Sprinto)
Main Rules for Good Practice
In the U.S., for shops to earn trust and be seen as solid, following certain rules is key. These rules help keep data safe and prove to customers and friends that you care about their safety. Each set of rules has its own role and fits certain work fields, but their big goal is the same: to keep private info safe.
SOC 2
Service Organization Control 2 (SOC 2) is a top pick for B2B firms in North America, often for software and financial tech groups. It looks closely at five main points, called the Trust Services Criteria: safety, being there, right handling, keeping secrets, and privacy.
A plus of SOC 2 is how it can change to suit you. Checks are made to match what you do, letting you pick what matters most to your shop, like safety or keeping secrets. An outside checker looks at your ways and gives you a report for your eyes only, which you can then show to clients or friends as you choose.
The price for SOC 2 checks can be between $20,000 to $100,000. Nathan Bliss, a top sales person at Kinsta, talks about the good things that come with meeting SOC 2 rules:
"Achieving compliance has significantly boosted customer trust and satisfaction at Kinsta. Our SOC 2 report and ISO certifications have become key differentiators in the market, giving our customers confidence in our security and data management practices".
HIPAA
If your work deals with Protected Health Information (PHI) in the U.S., you must follow the Health Insurance Portability and Accountability Act (HIPAA) rules by law. This plan is key to keep safe patient health records, billing info, and other private health data.
Not like SOC 2, which you can choose to follow, HIPAA is a must for all related firms and their business friends. To obey, you must put in place tech, admin, and physical safe-keeps. This means writing clear rules, checking risks often, and teaching staff so that PHI stays safe.
While HIPAA cares about health data, other plans like GDPR and ISO 27001 look at wider parts of data safety and running security, making them good for firms all over the world.
GDPR and ISO 27001
The General Data Protection Regulation (GDPR) is a European rule made to keep safe the personal data of EU people. If your firm is in the U.S. but deals with EU citizens' data, you must follow GDPR. It sets strong steps to guard data and lets people have more say over their info.
On the other side, ISO 27001 is a global standard for setting up an Information Security Management System (ISMS). While SOC 2 is big in North America, ISO 27001 is known all over, more so in Europe and Asia. Both SOC 2 and ISO 27001 have about an 80% match in what they need, says Marc Gold, Attest Manager at BARR.
"Though they are two completely separate audits, working with SOC 2 auditors who are also certified ISO Lead Auditors can make the process feel more like one and a half audits".
ISO 27001 lets you show off a public approval, not like the private report of SOC 2. It shows how much you care for safety.
PCI DSS
If your group handles credit card payments, following the Payment Card Industry Data Security Standard (PCI DSS) is a must. This set of rules tells you how to keep credit card info safe. It is key for those who do dealings with cards.
| Framework | Focus | Region | Must Follow | Cost Range |
|---|---|---|---|---|
| SOC 2 | Set rules, Trust Services | North America | No | $20,000 - $100,000 |
| HIPAA | Health info safety | United States | Yes | Differs by setup |
| GDPR | EU people's data | EU/Global | Yes | Differs by setup |
| ISO 27001 | Keep info safe | Everywhere | No | $30,000 - $150,000 |
| PCI DSS | Keep card data safe | Everywhere | Yes | Differs by how much sold |
Knowing these setups is key to fit your work with what the field sets and what buyers want. With 34% of firms not getting work as they lack right papers, hitting these must-dos is not just about law or running needs - it's a smart move.
Key Audit and Compliance Words for Founders
Checking up on audit and compliance can be heavy for founders, but knowing the main words is key for keeping data safe, handling risks well, and lining up with what the law wants. Here's a simple look at important ideas every founder must know.
Governing, Risk, and Following Rules (GRC)
GRC is about mixing governing, risk handling, and following rules so that IT work goes with business aims while keeping digital stuff safe and lessening risks.
Here's why GRC is important:
- 60% of places say they had at least one data leak in the last year.
- Another 60% find it hard to stick to rules they must follow.
- About 40% see big online dangers coming.
- In a fun twist, 62% of places now think risk is a chance to take.
The GRC field is set to reach $127.7 billion by 2033, and people who work in cybersecurity for GRC make an average yearly pay of $122,890 in the U.S.
"GRC – Governance, Risk and Compliance – is what aligns your business objectives with sustainability and integrity." - NAVEX
"GRC ensures businesses don't just meet requirements but operate better overall." - Scott Mitchell, Founder of OCEG
To use GRC well, set clear aims, make and use rules, do regular risk checks, and always aim to get better. A strong GRC plan also makes sure you have a traceable way to track what's been checked, which is key for being able to show who did what.
Audit Trail and Control
An audit trail is a time-based list of actions and events, paired with steps to cut risk, to keep things secure and ensure we can check who did what.
Audit trails are not just smart to have - they're often needed by law. For example:
- Public firms have to keep 366 days of logs under SOX rules.
- The healthcare field must use audit trails because of HIPAA.
- Banks and finance firms use these records to meet SEC and NYSE rules.
For founders, audit trails show clear views, make sticking to rules stronger, and make security better by tracking what users do. These records make audits easier and boost how well things run. A well-kept audit trail helps with good risk checks and quick fixes to problems.
Risk Assessment and Remediation
Risk check means finding, studying, and sizing up possible threats and guessing how much they could hurt your work. Fixing these focus on dealing with these risks by actions like fixing security holes and changing setups.
The stakes are big:
- A data breach can cost an average of $4.88 million.
- 84% of firms with high-risk weak spots could have fixed them with a simple software refresh.
While checks find weak spots, risk checks figure out the business impact if those weak spots are used badly. Even small starts should take simple steps to keep customer data, money records, and ideas safe. Heads should also bring in top bosses in security talks early to line efforts up with work goals.
Attestation and Third-Party Risk
Rule-following doesn’t just stop at what you control inside - it also goes out to being checked and handling risks from outside ties.
Attestation is about formal okays given during audits. When an outside checker looks at your rule-following plans, their attestation says your controls and processes work well.
Third-party risk pops up when working with vendors, suppliers, or outside partners. As your work grows, these ties can start new weak spots. To cut these risks, check vendors for rule-following papers like SOC 2 reports and proof of strong risk plans.
Compliance Docs and Info Security Rules
For leaders growing their work, keeping rule docs in order is key for growth and sticking to rules.
Rule docs cover rules, paths, and records showing you stick to legal and rule standards. Info security rules, on the other hand, are about putting up safety walls - tech, admin, and real - to keep sensitive data safe.
Keeping docs updated not only shows care to customers and partners but keeps audits smooth. It can also protect if a security mess happens. By keeping full records, leaders show they are accountable and build trust as their work grows.
How Apps Make Following Rules Easier
Running things right in a business can seem hard, mainly when it grows big. But here's some good news: apps and experts make it less tough. By making manual jobs automatic and putting all efforts in one place, these solutions let owners keep up with rules without getting stuck in too many sheets or hard steps.
These apps make it easy to manage by doing jobs like keeping files, tracking deals, and checking risks on their own. Instead of struggling to keep track of everything by themselves, owners can see risks and spot rule issues on live boards. With more third-party sellers in the past three years (71% of companies say so) and new risks found later on (80% report this), it's easy to see why these tools are key.
Managing GRC Tools
Governance, Risk, and Compliance (GRC) tools help by putting all your details in one place. They take care of repeat jobs and give quick info. But, to use these tools best, you need smart handling.
Expert services deal with everything from setting up and keeping software like Drata, Vanta, Secureframe, and Thoropass running well. For instance, in 2024, ReadMe worked with Cycore's GRC services to better their rule-following steps. The outcome? A 66% cut in time on safety forms and 1,656 hours saved each year. This let them make deals faster and grow the business.
"Cycore provided exemplary service in managing our compliance needs. Their team's experience is evident with how quickly they were able to solve our challenges." - David Kim, Co-Founder, Monterra
Good advice is just as key as the tools themselves. Many small firms can't pay for full-time security heads, but they still need someone to lead the way. This is where Virtual CISO (vCISO) and Virtual Data Protection Officer (vDPO) help comes in.
A vCISO gives key security ideas, helping you make a strong cybersecurity plan and stay true to rules. A vDPO, on the other hand, helps with data privacy laws like GDPR and CCPA, guiding you on how to deal with data right and keep up with new privacy rules.
These helps are very useful when you think about that 63% of people in a Deloitte study said making better third-party risk checks was a main goal. Virtual pros give the advice you need without the cost of a full-time job.
"With Cycore, there's no need for my team and I to worry about security and privacy. Cycore keeps us up to date on our compliance program and notifies us ahead of time if they need something from us." - Nils Schneider, CEO & Co-Founder, Instantly
Always Watching and Help with Audits
Following rules isn't just a one-time thing - it needs constant care. Tools that watch non-stop check on your safety status all the time, spotting big problems before they grow. This really helps keep track of audit records and handle risks well.
With audits, teams that know the ropes stand out. They know just what the checkers want, get your papers ready, and walk you through it all. For example, Resolver users have dodged close to $979,000 in fines and made their check-ups 75% more quick. For businesses that are growing, this saved money can go back into main work activities.
"Cybersecurity ratings will become as important as credit ratings when assessing the risk of existing and new business relationships…these services will become a precondition for business relationships and part of the standard of due care for providers and procurers of services." - Gartner
sbb-itb-ec1727d
Full List of Key Terms for Founders
This list gathers all the main check and rule terms every founder must know. It's made to be a fast guide to help you move through talks about rules with your team, people you work with, and checkers.
Whether you're dealing with plans or making plans with people who have a say, this table puts important meanings right where you can get to them fast.
| Term | Definition | US-Specific Notes |
|---|---|---|
| Attestation | A formal paper showing that a group meets set rules, often made by an outside checker. | Often needed for SOC 2 Type II checks and other outside okays. |
| Audit Trail | A time order log showing system moves that records events one after another. | Key for showing rule follow during checks or looks into. |
| CCPA (California Consumer Privacy Act) | A rule in California that lets people have more say over their own data. | Fines can hit up to $7,500 each time it is broken, for firms that serve California folks. |
| Compliance | The act of sticking to rules and norms to cut risks in business. | Rules and legal blocks are a top five reason why startups fail, as per a CB Insights study. |
| Continuous Monitoring | Always checking security steps and rule follow with auto tools and checks often. | Keeps you aware of your security state all the time. |
| Control | A step made to keep data safe, whole, and open. | Must be well shown in papers and checked often to meet rule needs. |
| Data Subject Rights | Legal rights that let people see, fix, remove, or move their own data. | US state rules differ, but under GDPR, people also have the "right to be forgotten." |
| GDPR (General Data Protection Regulation) | An EU law that keeps personal data safe and private for EU folks. | Not following it can lead to big fines: up to €20 million or 4% of worldwide cash, whichever is more. |
| Governance, Risk, and Compliance (GRC) | A full plan to handle company rule, risk, and rule efforts. | GRC tools make rule tasks simple and bring management into one spot. |
| HIPAA (Health Insurance Portability and Accountability Act) | A US law that keeps patient health info safe. | Puts a focus on keeping Protected Health Information (PHI) safe and is run by itself. |
| Information Security Management System (ISMS) | A set plan to keep sensitive info safe. | Crucial for getting ISO 27001 approval. |
| ISO 27001 | An international rule for handling info security systems, including control needs. | A choice, but known all over the world. |
| PCI DSS (Payment Card Industry Data Security Standard) | A security rule for groups that deal with card buys. | A must for firms that handle, keep, or send card owner data. |
| Personal Identifiable Information (PII) | Info that can point out who a person is, like names, places, or Social Security numbers. | US laws usually cover these info bits under PII safety. |
| Protected Health Information (PHI) | Health data tied to a person. | Strongly kept safe under HIPAA to stop wrong use or reach. |
| Remediation | Fixing and dealing with found security weak spots or rule misses. | Must be done by time limits to keep in line with rules. |
| Risk Assessment | A planned way to find and weigh risks to a group. | Often the first move in making a cyber rule follow plan. |
| SOC 2 (Service Organization Control 2) | A check rule that looks at security, being open, work truth, keeping things private, and privacy. | Big in North America and gives a lot of report details. |
| Third-Party Risk | Dangers to safety or rule follow brought by sellers or pals. | 71% of firms say they have more third-party sellers now than three years past. |
| Virtual CISO (vCISO) | A hired out chief info security officer giving plans. | A money-wise choice instead of having a full-time boss. |
| Virtual Data Protection Officer (vDPO) | Hired out DPO work to handle privacy rule follow. | Helps groups work with GDPR, CCPA, and other privacy rules. |
| Vulnerability Management | The steps of finding, weighing, dealing with, and telling about security weak spots. | Key for keeping strong security and following rules. |
This glossary is more than a list - it's a tool to aid you in talking well with auditors, security groups, and sellers. Sticking to rules isn't a one-time thing; it's a constant job. Former U.S. Deputy Attorney General Paul McNulty once said:
"The cost of non-compliance is great. If you think compliance is expensive, try non-compliance".
Ransomware hits grew by 95% in 2023. The cost of a data leak may hit $4.88 million in 2024. Knowing these facts is key to keep your business safe and stay in front of dangers.
Wrap-Up: Being Sure in Compliance
Understanding audit and compliance words sets the base for strong growth in business. As Megan Rose rightly says, "In the business world, compliance and audits are more than just staying out of trouble - they build a culture of honesty, detail, and duty".
Knowing these words means more than ticking boxes; it drives success. Good compliance can open doors to more money, bigger deals, and stronger ties with big clients who need tight security. When you talk well about SOC 2 controls, GDPR needs, or third-party risk plans, you show the kind of grown-up working that today's B2B buyers look for.
The facts are clear. More and more businesses are putting money into compliance tech to dodge big problems. The Hyperproof Team points out the stakes: "Compliance is a key to growing a strong, winning business, and will hurt you if you don't think about it when starting your business".
Modern compliance tools do more than meet rules - they help grow your business. Tools like Cycore's full solutions ease your load, managing everything from SOC 2 papers to GDPR rules. With skills in over 15 compliance areas, and services like Virtual CISO roles and GRC tool work, businesses can get big-level help without the cost of full-time security staff.
Top names in the field always praise Cycore’s ways.
The path to good compliance begins by knowing the words. These terms are key tools for clear talks with auditors and security teams. Whether you're setting out your risk check plan or talking about your watch plans, using the language of compliance gains trust and cuts down sales times. Use this word list to help your talks and speed up your business growth.
FAQs
What money risks could a new business face if they don't follow rules like GDPR or HIPAA?
The Price of Not Following Rules
Not following rules like GDPR or HIPAA can hit new small businesses hard - both in their pockets and how they run. For example, if you break HIPAA rules, the fines start at $141 and can go up to more than $2,100,000 for each time you do it wrong. In big trouble cases, doing crime can make you pay up to $50,000, and you might even land in jail. On the other hand, if you mess up with GDPR, your fine can be as huge as €20 million or 4% of all the money your company makes in a year - whichever is more.
For new small businesses, these fines can hurt a lot more than just their money. They can shake up how stable their money sit, ruin their good name, and mess up how they work day by day. For businesses just starting, the risk is even bigger, making it very important to care about following these rules right from the start.
How can founders pick the right rules to follow for their work?
Founders must look at three main things: their work area, where they are, and what kind of data they deal with. These points show which laws they must follow - like GDPR for keeping data safe or HIPAA for health info.
Next, doing a risk check is key. This step finds the big must-do rules and lines up plans that meet both the law and help the company's big goals. By focusing like this, they keep on the right side of the law and set up for big growth.
