SBA TO SMALL BUSINESS OWNERS:
Don’t pirate software!

Small businesses are an integral part of the U.S. economy, representing 99.7 percent of all employer firms and accounting for half of all private sector employees.

But small businesses often suffer low cash flow, especially in the formative years. And their owners may be tempted to “bend the rules” when it comes to software.

What you may not know is software piracy — installing unlicensed titles — is against the law. It can result in damages of up to $150,000 for each software title copied and increases the risk for security and technical complications.

In 2005, approximately 21 percent of software installed on U.S. computers was unlicensed, resulting in more than $6.9 billion in losses. 

To help American small businesses avoid the risks of unlicensed software, the U.S. Small Business Administration (SBA, www.sba.gov) and the Business Software Alliance (BSA, www.bsa.org) are partnering for a yearlong education program, “Software Strategies for Small Businesses.”

By following the best practices outlined here, you can protect yourself from the legal and financial consequences of using unlicensed software. 

• Establish a software policy. The first step to managing your software assets is to develop guidelines concerning the illegal copying and use of commercial software in your business.

Formalizing a software policy statement will not only help guide software decisions, it will also demonstrate to employees the importance of using only licensed software.

• Communicate your policy to your staff. Once you have established a software policy, it is important to educate employees about it.

SBA and BSA recommend distributing it to current employees, including it in orientation materials for new employees, posting it on company bulletin boards, and making it available on company computer networks.

Even after your software policy is established, remind employees about the security and financial risks associated with unlicensed software annually.

• Centralize your compliance process. Your software policy will only be effective if someone at your business is responsible for enforcing it.

Assign an individual or team to manage the compliance process, including maintaining a central file of all original materials, such as manuals, registration cards, license agreements, and receipts for each software purchase. 

Also, consider requiring all software purchases be made through a designated company authority, and software purchase requests should be made in writing and approved by a manager.

• Purchase from authorized dealers. To ensure the software you are purchasing is legal, buy only from authorized dealers or through reputable application service providers (ASPs).

• Audit your assets. Software is a valuable asset to your small business, and regular auditing is imperative to protect your business and ensure compliance.

Audit office computers and laptops on a monthly basis, maintaining a database of owned licenses and authorized users, as well as deleting unlicensed software or obtaining any licenses needed for compliance.

SBA and BSA also recommend conducting periodic spot checks to ensure compliance.

You can get free auditing tools from SBA and BSA at www.SmartAboutSoftware.org.   

• Enforcement. Because the stakes are so high for small businesses, it is imperative to make sure your software policies are followed. Noncompliance puts your business at risk for legal action, fines of up to $150,000 per violation, and could open your network to viruses and security breeches. 

Require employees to sign a corporate software policy statement that says employees found in violation of the policy may be subject to termination.

• Keep informed. Stay up-to-date on emerging software piracy trends to better understand how to protect your network security and business from software piracy threats. Visit www.bsa.org for the latest information about and tools for responsible software management.

• Work with software associations. Software management is critically important for every small business, but it can sometimes be difficult to start a program for the first time. Software associations such as the BSA have the expertise to help you ensure software compliance. Contact BSA at 888-NO PIRACY or www.bsa.org. For other small business questions, contact SBA at 800-827-5722 or www.sba.gov.