Regulatory and political changes can have a tremendous impact on your business. If you’re not aware of possible regulatory changes, you’ll be caught off guard and have to react to those changes rather than having the opportunity to prepare for them. The more involved you are in the regulatory arena, the more effectively you’ll be able to influence regulations and keep your business running smoothly.
Legislative and regulatory changes can cause massive upheaval for your strategic plan. Elections happen all the time. New rules and regulations are proposed, implemented, or repealed on a daily basis. Court cases can change an entire industry landscape.
To stay on top of all these changes and to prevent being blindsided by new developments, follow electoral races, regulatory initiatives, and landmark court cases that can affect your business. Build contingency plans for possible political, legal, and regulatory outcomes. I’ve seen legislation and regulations impact businesses in huge ways.
Make Your Perspective Known
One client I worked with was dealing with some massive regulatory changes in terms of how regulators were going to interpret the way their industry worked. This client was proactive. They got involved with the regulatory comment period. They put their perspective forward through experts, and got regulators to pay attention. The outcome was they were able to shift some of the regulatory interpretations that were going to affect their business.
Shape the Regulations When Possible
Another company that I worked for had regulators come in and define a new rule. The problem was, the regulators didn’t say how they were going to interpret the rule. We were a little bit confused. We said, “You’re putting in place a rule, but you’re not telling us how you’re going to interpret it?” What that did was give us an opportunity to offer our perspective on how the regulators should interpret it. We were able to shape that perspective. This approach had two benefits. First, we shaped the perspective in a way that would benefit our business. Second, we were also able to shape it in a way that would hurt our competitors. It was kind of a win-win – for us, at least. But the only reason we were able to shift these perspectives was we were on the front end of the interpretation guidance being created.
Make Changes Proactively
In another situation, a company I worked for was dealing with some accounting changes. It was clear regulators were going to mandate a change in the accounting regulations. We could’ve sat back and waited for the regulators to mandate it, and then made the change, but we didn’t. We moved forward, we made the change, and we were able to interpret the way that the regulators were going to look at the accounting, so it affected us positively, and our competitors negatively.
Don’t Get Blindsided
I also worked with another business that didn’t see a big regulatory change coming. They weren’t paying attention to some of the local and state regulations that were being rolled out across the country. One day, they received notice that the state of New York made a massive change to consumer notification rules. This company provided services at consumers’ homes. The State of New York said “If you’re going to provide these services, you now need to notify every neighbor adjacent to that property. Oh, and by the way, that notification needs to be by mail.” This company was totally surprised. They didn’t have the systems in place to notify neighbors. They didn’t have the mailing capability. It took them several months and tens of thousands of dollars to get compliant with the new rules.
If you think elections, regulations, or court decisions can’t impact you at the business unit level, you’re taking a huge strategic risk that can cripple your business. Get to know your colleagues in the government relations function. Get them to give you a regular political, legal, and regulatory briefing on issues that can impact your business. The better you understand the legislative and regulatory environment that you’re operating in, the more effectively you can plan for those changes and put your contingency plans in place before the regulations hit.
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