How to Stay in Compliance

If you are running a retail business, there is a scenario that you have either come across or have thought about.

It’s a Friday afternoon during the summer — possibly before a big holiday weekend. Your store is humming: people are coming in to buy things to go to the lake; fueling up the car and buying snacks to head out on a road trip; a woman is stopping by the store to pick up a few things while she is heading home from work. It looks like it’s going to be a good weekend for business. (OK, OK, maybe in your mind, this is pre-COVID.)

Then, a woman comes into the store and starts walking through the aisles. You can tell she is looking, but not shopping. She walks by the coolers, eyes your beverages and then disappears into the beer cave. A few minutes later, she comes out and starts heading toward the cash register.

The woman identifies herself as an inspector from the state alcohol control board and shows you her ID. Your first thought is that you’ve been involved in a “sting” operation and that you, or one of your staff, has sold beer to an underaged person with a fake ID. Visions of fines, reprimands and additional training flash through your mind in a split second.

The woman speaks. She tells you that the state is doing a series of random inspections around the county to make sure that alcohol permit holders are following the rules when selling beverages, storing and displaying them properly, and having the proper signage in place. She says that you are doing a good job and asks to see your permit and paperwork.

You look up at the wall where the permit is supposed to be displayed, but it is not there. You remember that everything on that wall had to be taken down when there was water damage from the big storm during the spring. You also realize that you don’t have a clue as to where the permit is. As the inspector stands in front of the counter watching, you start clawing through every stack of paper you can find — under the counter, in a drawer, on a shelf. 

Finally, after seven or eight minutes (or was it 17 or 18?) you recognize the state logo and colors of the permit. Triumphantly, you present the permit to the inspector, blinking away the sweat from your eyes. The inspector looks at the permit, looks at you and then looks back at the permit.  She regrets to inform you, she says with a hint of sadness in her voice, that this permit expired 30 days ago. Do you happen to have the renewed permit?

You smell something in the air. It is the scent of something burning. You are becoming toast.

The inspector says you must stop selling all alcoholic beverages immediately until you get a new permit. She also writes on a pink piece of paper and hands it to you. It is a notice stating that you are going to be fined for selling without a license. When you ask, the inspector says that the field office is closing in 15 minutes and is 45 minutes away. Therefore, the first opportunity to speak with someone in the office will be Monday morning. So much for the holiday weekend.

The economic impact of an unforced error such as this can be huge: lost sales, fines, and the cost of defending any administrative penalties. That’s the best-case scenario. Worse case is that your permit could be suspended indefinitely.

At StrasGlobal, we operate stores around the country. Multiple jurisdictions in multiple states means that we always have an exposure to a permit or license being out of compliance.

“Back in the day,” about five years ago, we tracked our permit renewals using spreadsheets, calendars and sticky notes. It was a fragile system, at best. If the person looking after the system got sick or quit, confusion reigned.

For us, there were two big consequences of not renewing a permit in time. The first, of course, was the cost of the fines and the lost sales and profits. The second was the loss of face. At StrasGlobal, we contract-operate stores for people and companies who own or control the properties but don’t want to operate the sites themselves. We provide a turnkey professional operations service that includes getting all of the appropriate permits and licenses and keeping them up to date. Needless to say, having one expire, and our clients losing revenue, is not a good professional look.

To overcome this, we created a system that we call the Compliance Cycle. There are six steps: plan, implement, anticipate, respond, review and repeat. I’ll give you a brief overview of each step.

1. Plan

The first thing you need to know is what is required of you. What parts of your business need permitting or certification? The easy ones to identify are alcohol, tobacco, lottery, health/foodservice and underground storage tanks. The ones that are not so obvious are propane canisters, ATMs, and weights and measures. (Note: different jurisdictions require different permits and licenses; this is not a complete guide.)

So, how do you find out what is required? The best place to start is with whatever associations you belong to — NACS, SIGMA, EMA, your state association or your local buying group.  They should have information on current and future requirements. The next best source of information is your peer group, other operators who run a business similar to yours in the same area. Ask them what they do.

Once you gather the information, put it together in one place so that you know all of the deadlines involved. Do an inspection of your business to make sure everything onsite is in compliance. Check equipment and permits to ensure they are up to date and note when they need to be renewed.

Put a plan together outlining what you need to do. Store this information somewhere safe and easily accessible. Make sure someone on your team knows about the plan and where the information is.

2. Implement

Now that you have your plan, put it into place. Make sure all permits and licenses are renewed. Ensure that all regulated equipment is inspected and/or certified. If someone is doing this for you, inspect the work and make sure it has been done properly. Taking care of the details is one of the most difficult aspects of compliance, and the thing that usually gets you into trouble.

3. Anticipate

Think about what may go wrong and make plans to fix the problem. If you have equipment that you are concerned about, identify the maintenance or tech support people ahead of time. Tell them what you may need them to do so that they are prepared and have the supplies in stock. This will save you time and money if you have an equipment failure.

Do preventive maintenance. Is the equipment old? Perhaps you should think about replacing it.  Are there parts that wear out regularly? Have a maintenance program in place to replace them before they fail. Does a piece of equipment have a battery backup? Make sure the batteries are fresh and charged. An ounce of prevention is worth a pound of cash.

4. Respond

If something goes wrong, respond according to your plan. Call the people you identified earlier. If something goes wrong and you didn’t plan a response for it, know what your end goal is so that you can come up with a solution to get back in compliance.

5. Review

Once the event is over, look at what happened and what could have been done to either prevent the accident or fix it faster. Change your plans to reflect what you’ve learned and to cover the different scenarios that you’ve experienced.

6. Repeat

Once you’ve done the review, start the cycle over again. Revise your plan, implement it, anticipate problems, respond to issues, and review what happened. Then, repeat the cycle again. With each repetition, your plan is going to be stronger and more robust and you will have less downtime, repair costs, lost revenue and fines.

An important tool that we use at StrasGlobal is Compliance Safe, a software program that we initially developed for our internal use to keep track of our permits, licenses and important documents and that we now offer to other retailers for their use.

The status of every permit at every site is easily viewed on the Compliance Safe dashboard.  It automatically reminds us when the renewal dates are coming up, and we can store copies of all the documents online so that they are available anywhere, at any time, on any device. We can also share our information with other companies who need to know about our business, such as our bankers. We’ve gone from spending three or four hours a week on permit compliance issues to about 10 minutes per week.

However you stay in compliance, make sure the system works for you all the time and is easy to use. Staying in compliance will keep you legal, in business, and out of trouble.

If that inspector comes, you’ll be ready.

Editor’s note: The opinions expressed in this article are the author’s and do not necessarily reflect the views of Convenience Store News.