Corporate governance is often considered to be too complex and time consuming for start-up and SME businesses to bother pursuing.
What many don’t realise is that embracing good corporate governance principals early on will enable for smoother sailing later. It could also potentially make your business more attractive to a buyer, if at some point you decide to sell.
Part of following good governance principals involves developing systems and processes. While this may seem unimportant now, they will ultimately save you time and money in the long run.
For example, if you are a family run business, it is important that you have policies in place to ensure that any employment is based on fulfilling the relevant criteria for the role, and not simply used as a way of creating a position for a family member.. Performance management is hard enough, let alone when you have to performance manage a family member because they are in a position they are not qualified for or suited to.
Establishing an advisory board is another great way to embrace good governance. Obtaining outside expert advice ensures that your business is operating in an efficient and compliant manner. Having someone you trust who understands the business but is not involved in the day to day can be invaluable in what is often a lonely environment for a sole owner. This may simply be a trusted mentor or a number of people, either acting independently or together as an advisory board. These people can also help you with your own career and personal development, something which can be overlooked when running a business.
An advisory board can also assist in playing a large part in developing strategy, managing risks and identifying opportunities in the market.
Clear definitions surrounding the key roles and responsibilities between the board and you as the owner is essential in setting and maintaining a functional and successful relationship.
Another principle you can implement in your business is ensuring that any directors, executives and management receive ongoing training. With the rate of change increasing each year, it is vital that key figures within your business stay abreast of any developments if your business is to remain ahead of the curve.
Other simple measures that you can introduce include setting aside time to regularly review your plans and strategy and establishing guidelines that 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 running. What some fail to remember is that a good product or service offering on its own is not enough. Continued success and growth is reliant on the founders, directors or management taking the time to regularly step out 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.