When you run a small business or a family business, you always have a lot of responsibilities on your plate. You not only have to worry about the day-to-day tasks involved in running your business, but you have to think long-term so your business can succeed and grow. One task you may not consider too much is establishing good corporate governance for your business.
What is good corporate governance?
For a small business or family business, establishing good corporate governance largely centers around establishing an independent board. The independent board members can:
- Provide ownership and management expertise in specific areas management is less familiar with
- Become a sounding board for company management, to help guide their decisions
- Help company management develop strategies and deliverables for new initiatives
- Give independent advice and judgement on company matters
- Provide constructive criticism for company management
Why is good corporate governance important?
As your company grows, establishing good corporate governance becomes even more critical. Without an independent board, your company may develop blind spots – areas you overlook for convenience. You may not have the internal expertise to take on an unexpected challenge or grow the company in new ways.
If you run a family business without good corporate governance, you may not have company leaders who are willing to tell you what they really think. You may have family members as managers who don’t make decisions based on the best interests of everyone or fail to develop long-term goals. Without good corporate governance, a family business could fail to have the accountability and transparency needed to be a successful company. A family business or small business without an independent board also could fail to operate as ethically as it could.
Ultimately, establishing good corporate governance is good for a business’ financial success. It gives companies, even small businesses, more ability to be resilient and overcome setbacks and challenges. It gives a business a solid foundation, built on independent thought. Most importantly, it offers businesses a full perspective on their operations and better guidance on building for a strong future.