Governance for Small to Medium Business

The basic principles of good governance are fundamental to the sustainability of all businesses whether they be small, medium, large, family owned, private or public companies. Having a business plan, instilling financial acumen, risk management, succession planning and ensuring there is accountability and transparency to owners are all important components of a successful business.

For small to medium businesses, good corporate governance is as simple as understanding how decisions should be made and by following the appropriate processes. By doing so, you will be creating accountability and transparency, protecting decision makers and giving confidence to those who deal with (or invest in) your business.

As a director or business owner of a small to medium business, it‘s important to understand the contribution governance can make to business growth and long term sustainability.

What is corporate governance and why should I care?

Corporate governance can be described as a collection of laws, rules and guidelines through which a company makes business decisions. Directors and owners are ultimately responsible for a company‘s decision-making and must put in place a system of processes to allocate accountabilities, communicate, control and monitor the organisation.

Governance is important to every business as it provides a framework for business growth, mechanisms for performance management, provides a sound approach to risk management and helps ensure compliance with laws and regulations.

What governance practices should I be considering for my business?

There is no proven model for successful corporate governance. Businesses vary in terms of their industry, size, complexity and ownership structures. As your business grows, the governance structure will need to evolve with the changing needs of your business.

The following diagram illustrates key foundational elements of a sound governance framework. Click on each area for practical guidance and suggested governance approaches that your business should consider:

Remember, good governance will only work in your business if individuals responsible for undertaking actions on behalf of the company understand, abide by and embrace the principles of good governance as part of the organisational culture.