Opinions expressed by Entrepreneur contributors are their own.
Key Takeaways
- You might be asked if you’re SOC 2 compliant by potential customers.
- The process of becoming compliant can be costly and time-consuming.
- If your business isn’t ready yet, there are four things you can do now to reassure prospective clients.
It usually starts with one email. A customer you’ve been courting for weeks writes back: “Before we move forward — are you SOC 2 compliant?”
Then another customer asks. Then their purchasing department sends a security questionnaire with 200 questions and a deadline. You start Googling, and within an hour you’ve learned that getting compliant costs $20,000 or more once you add up auditors, software, consultants and your own time.
So: What is this thing, and do you need it? (Spoiler: You probably don’t)
What is SOC 2?
SOC (system and organization controls) is a reporting framework designed to evaluate the level of data management and security, and “SOC 2” is its version for SaaS companies.
It’s just a report written by an outside accounting firm that says, in effect: “We looked at how this company handles secure data, and they do what they claim they do.” An auditor spends weeks reviewing your systems and policies, then produces a document you can hand to customers who ask.
Here’s the important part: SOC 2 is not the same thing as being secure. Plenty of secure companies don’t have it. Plenty of companies that do have been breached anyway. What it really does is give one company’s security team a standard way to talk to another’s without starting from scratch every time.
It’s a corporate secret handshake. Useful — but a handshake, not a guarantee.
What to answer if you don’t have SOC 2
Your reflex might be to panic, or to fudge. Don’t do either. The answer that works is the plain one: “We don’t have SOC 2 at the moment. We do take security seriously, and here’s our current security and data protection documentation.”
That lands better than most owners expect, because the person asking isn’t in love with the acronym. They’re trying to answer a simple question for their boss: Is using this vendor likely to cause us a serious problem? Give clear, honest answers, and most people can work with that.
What you should never do is claim you have it, or imply you’re “basically compliant.” That’s the one version of this conversation that can actually blow up a deal.
Not having SOC 2 usually doesn’t end the conversation
Most companies have a process for vendors without SOC 2. They might send a longer questionnaire, ask for your written security policy, have their IT team review your answers by hand, or ask a manager to formally sign off on the risk. It’s annoying, but it’s rarely fatal.
Plenty of successful software companies do not have SOC 2. Many of them still sell B2B — to companies you’ve heard of. They get through on documentation, direct answers, customer references or an internal champion who wants the product badly enough to push it through.
The part nobody tells you
Here’s the joke at the center of all this: Having SOC 2 does not make the questionnaires go away.
Companies with SOC 2, and every other certificate you can name, still get asked to fill out security forms. Sometimes the form is shorter; many times it’s not. Every large customer has its own spreadsheet and its own vendor portal, because someone somewhere decided that was the workflow.
You can spend $20,000 and still find yourself typing “Yes, we require two-factor login for administrators” into a web portal that times out every 17 minutes.
So the question isn’t Will SOC 2 save me from paperwork? It usually won’t. The real question is: Is there enough revenue actually blocked by this one checkbox to justify the cost? That’s the cleanest rule I know.
What to do instead
If you’re not ready to invest in SOC 2 certification yet, here are four steps to take right now.
Write a real security page. Not “enterprise-grade security” marketing soup. Honest answers to real questions: Where is customer data stored? Who on your team can see it? Do you require two-factor login? How often are backups made? Is data encrypted? What happens when a customer asks you to delete their data? How does someone report a security problem to you?
Turn that into a short document you can email. When the next questionnaire arrives, half your answers are already written. Read every one carefully before sending — these answers become contractual promises.
Consider a penetration test instead. For a fraction of the cost, you hire a security firm to try to break into your product and write up what they find. It’s concrete, it fixes real problems, and it gives cautious customers something meaningful to read.
Charge properly for enterprise customers. If a $50-a-month customer wants custom contract terms, procurement calls, security reviews and vendor forms, they aren’t buying the $50 plan anymore. To them, $50 and $5,000 sit in the same mental bucket. To you, every review call is time you’re not spending on your business. Price it accordingly, or walk away.
When you should actually consider SOC 2
There’s a real moment for SOC 2, and you’ll recognize it. A signed purchase order is waiting on it, and that one deal more than pays for the process. Or you keep losing good customers where this is genuinely the blocker. Or you sell into banking, healthcare or government, where it’s the price of admission. At that point, pay for the handshake and call it a cost of sales.
But don’t do it because one prospect asked a scary question, or because a compliance vendor told you every respectable company needs a badge on its website. Done too early, it’s an expensive maybe.
Do the real security work first. Write it down. Answer questions honestly. Then, when the revenue is on the table, get the certificate.
Key Takeaways
- You might be asked if you’re SOC 2 compliant by potential customers.
- The process of becoming compliant can be costly and time-consuming.
- If your business isn’t ready yet, there are four things you can do now to reassure prospective clients.
It usually starts with one email. A customer you’ve been courting for weeks writes back: “Before we move forward — are you SOC 2 compliant?”
Then another customer asks. Then their purchasing department sends a security questionnaire with 200 questions and a deadline. You start Googling, and within an hour you’ve learned that getting compliant costs $20,000 or more once you add up auditors, software, consultants and your own time.
So: What is this thing, and do you need it? (Spoiler: You probably don’t)