Corporate governance for start-ups and SME businesses
1 July 2019
Corporate governance may seem too complex and time consuming for start-ups and SMEs, but it doesn’t have to be that way.
What many small business owners overlook is that embracing good corporate governance principles early on will lay the foundation for much smoother sailing in the future. It can also make your business more attractive to a buyer if you later decide to sell.
Developing systems and processes
Good corporate governance involves developing systems and processes. While this may not seem like a priority for start-ups and SMEs, establishing good systems and processes early on will save you time and money in the long run. For example, if you have a family business, it’s important to have systems in place to ensure that employees hired to fill key positions in the business satisfy the criteria for the role instead of just creating a position for a family member. Performance management is hard enough, let alone when you have to manage an under-performing family member because they’re not suitable or qualified for the role.
Establishing an advisory board is another great way to embrace good corporate governance. Obtaining outside expert advice will help your business operate more efficiently and in compliance with relevant laws. Having someone you trust who understands the business but is not involved in the day-to-day operations can be invaluable in what is often a lonely environment for a business owner. This person could simply be a trusted mentor or professional adviser, or a number of people acting either independently or collectively as an advisory board. These people can also help you with your own career and personal development, something which is often overlooked when running a business.
An advisory board can also assist in developing business strategy, managing risks and identifying opportunities in the market. Clear parameters around defining the key roles and responsibilities between the board and you (as the business owner) is essential in establishing and maintaining a functional and successful relationship.
Continuing Professional Development
Another corporate governance principle you can implement in your business is ensuring that all directors, executives and senior management receive ongoing training and continuing professional development. With the rapidly changing landscape of the business world, it is vital that key personnel in your business stay abreast of industry developments if your business is to remain competitive and ahead of the curve.
Other simple measures that you can introduce into your business include:
setting aside time to regularly review your business plans and strategies; and
establishing policies and guidelines to ensure any private or non-business activities or payments are not put through the business.
Anyone who has run a start-up or SME understands how much work is involved in simply keeping things afloat. What some don’t realise is that a good product or service offering on its own is not enough in today’s competitive marketplace. Continued success and growth depends on the founders, directors and senior management taking the time to regularly step away from the day-to-day grind of the business and critically evaluate where things are at and whether the ship is still on course. Implementing the tips above can help steady the ship and course-correct if required.
How can you implement better corporate governance in your small business? Get in touch and let us help you.