According to current data, SME’s account for nearly 99.9% of the 5.5 million businesses in the UK’s private sector. How they run their governance is a crucial element in the UK’s plc ethical performance.
What Is Good Corporate Governance?
Since it is agreed that good corporate governance is essential in any business, how can smaller organizations and start-ups measure up in ensuring they embrace and implement the same? Barclay Simpson advise:
- Meet Regulatory Requirements
Meeting all requirements regarding legislation and industry-specific rules is non-negotiable. Failure to do so can inhibit operations. The governing board is mandated with ensuring that the company’s strategy aligns with the sector’s regulations and local laws.
According to one of the recent reports, most boards are unconcerned about compliance, which is one of the deadly sins any company can commit. The BBC says this is a risk worth avoiding when doing business.
Cost-wise, the much you stand to lose when compliant is lesser than what non-compliance will cost you. Therefore, the small businesses and start-ups with tight budgets should ensure that they adhere to industry rules and meet their regulatory obligations.
- Your Approach Should Meet All Your Stakeholders Needs
The increasingly governance-oriented business environment has some directors focus more on the potential risk and less on success. The prudent approach in this is to ensure you have a means of addressing every aspect of your business’ operations and honoring every obligation you have to your stakeholders, customers, employees, and the community.
It would be best if you had this in mind when making investment, operational, or board decisions. It will help establish transparency in all operations, and this is the basis of every ethical business.
- Have The Right People In Place
The right decision making will demand that you have the right breed of professional on your board of directors. Gender balance with a blend of the ideal views will be factors to consider when formulating the board. Also, review the different professional qualifications and shared attributes of the successful directors when in the boardroom.
What Might Hold You Back?
Once you cover all these steps, you can move on to the next stage. However, limited resources can be a factor that leads to some stumbling blocks for smaller businesses and start-ups. Such restrictive elements include:
- Lack Of Time
For an SME, finding time to address every governance issue is challenging, more so when the right people who can wear several ‘profession hats’ are in short supply. Therefore, CEOs can benefit from our tips on the best time management strategies to help them address this matter.
Different studies provide an array of information that you can use to enhance your board’s effectiveness. You also can implement some of the suggestions we provide on the same.
- Lack Of Money
Financial constraints can be a significant concern for small companies and organizations. Non-compliance is one of the things that turn into costly mistakes. Invest in good governance, and you will be investing in your business’ future. Your company’s brand and the need for compliance are interlinked. Underestimating the impact that failing in governance can have in your business will be what sets your organization’s performance on a downward path.
- Doubting Benefits Of Technology
For many small businesses, the lack of money and enough time will necessitate innovativeness in establishing good corporate governance. However, you might be unsure of the effectiveness of the solutions when trying to improve on governance. Check out our blog that covers how to progress corporate governance with a board portal.
Every player in the global corporate seen must invest in good governance. While this might seem like an ambitious goal when you have a small workforce and a small budget, you can deliver on our governance obligations, as discussed in this article.