1. Regulation and the
Business Life Cycle
© Crown Copyright 2012

2. The Benefits of Compliance to Business
v Customers are protected and kept safe
v Employees are protected and kept safe
v Premises are protected from fire and flood damage
v Operational procedures are in line with good practice
v The risk of incidents requiring inspection is minimised
v The risk of sanctions after an inspection is reduced
v Efficiency savings are achieved
Compliance with regulation is a hallmark of successful businesses. It does entail associated costs for them but brings significant benefits, including the examples shown. With the shared aim of encouraging growth, regulators should give practical and accessible support to businesses as they are formed and developed. This can often be done simply by tailoring existing services to need and more productive dialogue. The five stages of the standard business life cycle are outlined in this presentation, together with their implications for the support regulators provide.

3. Business Life Cycle Curve – Planning
Typical considerations:
v Researching the market
v Protecting ideas
v Developing a business plan
v Getting finance
v Registering a business
v Choosing premises
v Planning considerations
v Product safety
v Licensing
v Compliance issues
The planning stage prior to the commencement of trading is crucial to the success of the business. Along with commercial basics such as research and finance, the business needs to consider compliance issues in order to gain an informed view of its viability and estimated start-up costs. These include the management systems necessary to meet the requirements of relevant legislation. It is therefore essential for regulators to give clear and unambiguous advice. In particular, where the business is sourcing premises, it needs clarity around planning conditions at an early stage.

4. Business Life Cycle Curve – Getting Started
Typical considerations:
v Using IT and e-commerce
v Selling and marketing
v Employing staff
v Dealing with tax and PAYE
v Managing costs and cash flow
v Gaining accreditation
As the business finds its feet, an understanding of all the legislation that applies to it helps it build compliance into its operational procedures at the outset. This is the stage at which the business is likely to need the most intensive assistance from regulators, in the form of responsible and proportionate advice and guidance on a broad range of issues. Regulators also have the opportunity to set a positive tone for their relationships with the business.

5. Business Life Cycle Curve – Growth
Typical considerations:
v Incorporated vs sole trader status
v VAT registration threshold
v Exporting and importing
v Managing quality
v Developing customer relationships
v Tendering for contracts
v Planning and finance
v Developing staff
v Managing change and risk
In the growth stage the business may well modify and enhance its operational procedures and extend or move its premises so once again it needs effective engagement with regulators to assist it through transitions. Thresholds that trigger new regulations may be crossed. For example, if the business increases its turnover to £77K or more it must become VAT registered, while if it increases its number of employees to five or more its duties in relation to fire safety and health and safety change.

6. Business Life Cycle Curve – Growth 2
The business often grows in a series of step changes that are triggered by passing through thresholds, many of which have a regulatory element. The regulators’ role is therefore crucial in ensuring that the business has the ambition and confidence to step over thresholds to achieve a higher level of productivity. For example, if the business increases its turnover to £77K or more it must become VAT registered, while if it increases its number of employees to five or more its duties in relation to fire safety and health and safety change. Other thresholds may include moving or expanding premises or commencing international trade.

7. Business Life Cycle Curve – Maturity
Typical considerations:
v Forming partnerships
v Restructuring
v Legislative developments
v Selling the business
At this stage the business is likely to operate without major changes and have tried and tested compliance management systems, although it may explore restructuring options such as the development of a franchise network or conversion to a cooperative. There remains much scope for regulators to conduct periodic inspections and give updates on new or amended legislation. Changes to existing legislation may require the business to revise its systems, processes or products to accommodate them. Regulators should not underestimate the associated costs and should provide the business with any assurance and support required.

8. Business Life Cycle Curve – Decline
Typical considerations:
v Selling the business
v Redundancies
v TUPE
At this stage the business may be reducing its workforce and may need to undertake compulsory redundancies or the sale of the business. With the transfer of staff under TUPE, certain areas of management including compliance may become neglected and the business may need increased assistance from regulators.

9. Support Packages for Business
Life cycle stages:
v 1: Planning
v 2: Getting started
v 3: Growth
v 4: Maturity
v 5: Decline
Clearly, regulators already provide support services to businesses, using methods including leaflets, letters, helplines, website tools, training and inspections. The challenge is to package them in a way that is attractive to businesses, addresses their different needs at each stage of the life cycle, and is in line with wider commercial considerations. An initial range of business support packages might focus on three stages: start, growth, and maturity. The overall situation is roughly analogous to that of the energy companies: they all sell the same electricity and gas, but tailor specific offers to the needs and usage patterns of customers.

10. Support Packages for Business
Options for regulators:
v Provide telephone advice and literature
v Signpost other sources of specialist help
v Supply updates on new or amended legislation
v Give feedback on plans or proposals
v Arrange peer mentoring
v Conduct inspections
v Offer site meetings, seminars and training
Regulators themselves ultimately benefit from tailoring their services to the needs of businesses, by communicating in their language and giving appropriate support, augmented via partnerships with other relevant agencies. Through constructive relationships ensuring good compliance management at the outset, regulators help produce successful businesses that require less oversight as they grow and mature. On a final note, it is worth adding that businesses want to engage in a positive and meaningful way with regulators, recognising the advantages of consistent and proportionate regulation.