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Simon Coulthard March 07, 2022
Building a business from the ground up is no easy task and adding adherence to data privacy laws into the mix may seem like objective overload.
Fear not though – you’re bringing a new company onto the market at just the right time, when it comes to data privacy.
Besides, new regulations really are nothing out of the ordinary, and GDPR simply focuses the mind on how you manage customer data professionally – something that will ultimately help you build trust with your customers and improve your company’s reputation.
It’s really a win-win.
This article will look at how startups can deal with GDPR. It explains why they have an advantage over longer-in-the-tooth competitors when it comes to getting systems in place, before running through some tips for meeting GDPR requirements.
GDPR obliges “privacy by design”; what this means is that every single part of a company – from what you sell to each process you have in place – is set up around the fundamental principle of protecting the personal data of EU residents.
Crucially, GDPR applies to all personal data – whether it is in emails, spreadsheets, on the cloud, or in physical form.
As you can imagine, this is a real sea change in the business world, since it means that companies must make changes to every aspect of their operations. If not, you risk being hit by a GDPR fine of up to €20 million or 4% of your annual global revenue from the previous financial year – whichever one is bigger.
Meeting GDPR standards has admittedly been a real headache for many businesses, with marketing departments shouldering the bulk of this responsibility.
But startups have a real advantage over older, more established companies. They can build and implement GDPR-compliant practices into their business model from the beginning – something that is far easier than having to tear down long-established ways of working and starting again from scratch.
Generally, GDPR rules on data privacy apply equally to any company that holds data on EU residents.
However, there are a few minor exemptions for startups that might make things a little easier for you.
Firstly, companies with less than 250 employees are exempt from the obligation to keep an inventory of data or a record of data processing – unless they’re processing “special category” personal data – i.e. sensitive personal data like race, sexuality, and genetic data.
Secondly, startups usually don’t need to appoint a Data Protection Officer, since they normally don’t process nearly enough personal data to require one as per GDPR regulations. However you should still investigate further to see whether you need one or not.
GDPR compliance is a detailed process that will need attention in the long term. We have published detailed information elsewhere that explains how you can make your organization GDPR-ready.
However, as a general introduction, you will need to enact policies and processes in the following areas:
Startups need to clearly explain to people what data they collect and how long it will be used for.
Importantly, they must also have a “lawful basis” for this. And if this lawful basis is consent – as it is in many but not all cases - then it is essential that you keep a detailed record of this at every step.
This includes the collection of everything from website cookies and IP addresses to emails and the transfer of data to any third-party software you might be using.
Crucially, individuals must be able to opt-out at any time.
At its heart, GDPR obliges companies to look after any personal data they hold about people – meaning that security takes center stage.
As such, startups need to ensure that they are using the most up-to-date security measures available to prevent data from being hacked.
Furthermore, they need to limit personal data access by employees to authorized personnel, and to initiate processes that ensure that personal data is secure across any device or platform used by employees.
In the event of a data breach, startups need to have systems in place to limit the leak of personal data.
Companies also need to report that a breach has occurred to their country’s data protection authority within 72 hours of the event.
This report needs to include information on the exact data that has leaked, who exactly has been affected and what steps are being taken to keep the breach to a minimum.
Under GDPR rules, startups are accountable for how the personal data they collect is handled by any third parties that they work with – this includes suppliers and contractors, as well as any software that you utilize.
So, if you use Google Analytics for instance, you are responsible for what they do with this personal information, and best practice here would be to insist that third parties fill in a comprehensive GDPR checklist, and to sign agreements that specify their compliance with the data privacy law.
Furthermore, you need to consider whether any personal data is being transferred outside of the EU, since data protection laws elsewhere in the world do not meet GDPR standards.
As a startup, there is no better time for your business to get to grips with GDPR requirements.
What’s more, neglecting GDPR at this early stage of your company’s lifespan will have serious consequences in the future – particularly when you get to the stage where you want to expand into the international market.
And if you’re looking to start this process now, we’ve created a free GDPR compliance checklist to get you moving in the right direction.
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