Business governance is the set of procedures, customs, practices and policies that guide an organisation. It’s a pledge to maintain transparency, accountability, diversity and fairness across all facets of a business.
Small businesses usually don’t have the resources to develop governance procedures in addition to the day-to-day business operations, but good governance should be an essential consideration for any small-sized business if they want to expand or safeguard their reputation. The sooner a company implements basic governance measures, then the more confidence it can build with investors and stakeholders.
For example adopting governance procedures that clearly define who is responsible for any issues or mistakes helps to minimize the risk of investor panic and reputational damage. In the same way formal reporting procedures can reduce the chance of financial crises caused by unforeseen risks.
Finally, ensuring that your company adheres to the accepted regulations can help to minimize legal and regulatory issues which could lead to significant financial loss or reputational damage. This could also result in a an increased rate of success for the company and allow it to reach its goals more easily.
The best way to understand governance in business is by seeing it as a tool to control the company based on all relevant internal and outside external factors. This allows the Board of Directors to plan effectively and efficiently using data-driven insights.