Why Your Small Business Needs Good Governance and Accountability
Have you implemented good governance and accountability into your small business?
What is good governance?
Good governance is not when a business makes a ‘right’ decision. Good governance is when a business ensures that there is a good decision-making process in place. Without good governance, an organisation lacks policies and procedures to ensure accuracy, consistency and responsiveness to key stakeholders including customers, shareholders and regulators.
In a large enterprise, the management board will likely have a team who are charged with ensuring the firm adheres to the principles of good corporate governance as is expected of a large organisation. Whilst a small business may have a simple governance structure, small businesses must also ensure they have good governance in place. This can be achieved by having a trusted advisor, like a business coach or an accountant, or having some form of administrative support.
Regardless of the size of your organisation, good corporate governance is good for your business because of the following reasons:
Encourages good decision making
If a market shifts or a new trend/opportunity emerges in your business sector, having a robust decision making methodology in your firm can help you to change direction efficiently in order to drive the business forward. Good decision-making has a great impact on your employees’ morale on how they view your organisation.
Helps manage risk
You and your team may be focused on executing growth strategies, growing key client accounts and generating new business. This means there is a risk you could miss something. Often an outsider’s perspective can help you see new and simple solutions to business problems that would not have been obvious to you before.
Good corporate governance practices ensure the business stays on top of statutory reporting, annual returns, renewing insurance or licenses, etc. An advisor such as your accountant should hold you accountable and focused on meeting your legal and statutory requirements whilst also helping you see the bigger picture.
Encourages management to seek advice
Adhering to good corporate governance practices encourages managers to regularly review the firm’s strategy and performance and seek external opinions where necessary. Bringing in external expertise to aid strategic decision-making can add significant benefits to the firm.
To read more must know essentials for your small business, check out Protect Your Business With IT Security Training and Strong Passwords and How Small Business Owners Can Think More Strategically.
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