Good governance helps you and your business to manage risk and doesn’t only apply to large listed companies – it’s a must for SME’s as well. 

The recent, and very public governance failures at businesses such as BHS, Carillion and other well known brands, make it clear that business owners and managers need to do more in terms of living up to their responsibilities by  following best practice, etc.

Corporate governance refers to a set of internal policies, rules, and procedures that a company follows on a regular basis in order to ensure that it operates in a fair, equitable, and appropriate manner for the benefit of the company, its management and its stakeholders. Those stakeholders include your staff, customers, investors, suppliers and the wider community.

Most business owners and managers are familiar with the regulatory and compliance requirements of being in business but that is just the beginning of good corporate governance. The next step is to make sure that your business creates and delivers its strategy and that strategy should be designed to maximise the opportunities and minimise risk for the benefit of the firm and its stakeholders. In turn the strategy needs to be built into your company and its culture.

Good governance is not about making the “right” decisions - it’s about ensuring that there is a good decision-making process in place - and making sure that the process is followed. A robust decision making methodology in your business can help you to change direction efficiently in order to drive the business forward when opportunities arise.

In large businesses, the management board will probably have a team that is charged with ensuring the firm adheres to the principles of good governance. Smaller business can put a simple governance structure in place. This could be achieved by having a trusted advisor (such as your accountant) or a non-executive director (NED) on the board.

It’s easy to get distracted by growth opportunities, business development and so on so good corporate governance practices ensure the business stays on top of statutory reporting, annual returns, renewing insurance policies and licenses, etc. Your trusted advisor should hold you accountable and focused on meeting your legal and statutory requirements whilst also helping you see the bigger picture.

Finally, implementing good corporate governance practices encourages the management team to review and update the firm’s strategy on a regular basis in order to maintain and/or improve the performance of the company. From time to time, this may include bringing in external experts to assist with strategic decision-making.

Contact us for help in setting and achieving your governance strategy.