Effective governance is the cornerstone of business success and longevity.
Good governance is about structuring, operating, and controlling a company with a view to achieving long-term strategic goals for shareholders, creditors, employees, customers, and suppliers.
The effect of good governance is the realisation of the company’s desired vision and purpose due to achieving the required results and outcomes operationally in the business.
Why is good governance so important?
At a base level, good governance allows a business to keep operating:
1. Shareholders continue to invest money and time.
2. Funders continue to fund the business.
3. Suppliers continue to supply and allow credit because they sense a stable business environment.
4. Regulators (if any) allow the company to continue, as compliance matters are being met.
5. Customers continue to support the business by buying from it.
6. Employees continue to have faith in the business and continue providing their services.
How big does a company need to be to benefit from a governance process?
We would argue that the majority of companies, even smaller ones, would benefit from more effective governance. After all, “A big business starts small”
– Richard Branson
When a business is small, governance tends towards ad-hoc and laid back. On the other hand, when a business is large, governance can tend towards overly bureaucratic and arrogant.
The best governance, for all sizes of business, involves:
- Everything that’s needed; nothing that’s not
- Intense professional will, with deep personal humility
- Consensus without ‘groupthink’
Governing versus managing a business
GOVERNANCE
MANAGEMENT
Job Overview
Strategic
Operational, tactical
The Job
Given the purpose, what is our vision, and what strategies will the company use to get there?
Given the strategy, what does the team have to do to implement the plan?
Accountable to
Shareholders and the company
The directors
Monitoring
- Where are we and how did we get here?
- Where are we heading, and do we want to go there?
- What do we have to do to get this right?
Are we on track with our goals, team, and performance?
Governance planning
Good governance isn’t so much about learning a set of rules and procedures; it’s about having a mindset that desires to have a well-governed business. And you need some practices and coaching to get you there.
Contact our trusted KMT advisers to develop your Governance Plan and implement best practices.
About our adviser: Michael Fox has been dedicated to the success of his clients, devising comprehensive wealth strategies for both personal and business growth for over four decades. With extensive expertise in business governance and family business succession, Michael specialises in empowering emerging businesses and family enterprises by fostering renewal, enhancing value and smooth transitions to the next generation. Please do not hesitate to reach out if you need assistance with governance planning.
This is general advice only and does not take into account your financial circumstances, needs and objectives. Before making any decision based on this document, you should assess your own circumstances or professional advice from your accountants at KMT Partners.
