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Why is good governance important for SMEs?

In today’s business landscape, we are no stranger to stories of business failures, corporate catastrophe’s and company collapse. It’s not just smaller enterprises facing the threat of these possibilities either, but well-known names.

Whether a business succeeds or not can depend upon any number of things but the bearing that good governance can have on a company’s trajectory is often misjudged and underestimated, particularly amongst SMEs.

What is corporate governance?

Corporate governance refers to how a business is managed and the systems and processes that are implemented to support that. Good corporate governance should give you the ability to run a flexible, resilient, responsive and, therefore, sustainable business.

Here we discuss just a few of the key benefits that a good corporate governance regime can bring for a small business, plus a few top tips for how to begin implementing one…

Securing investment

A sound governance regime will improve your ability to secure external funding. Banks and investors will be more willing to fund businesses with considered protocol in place. Proper governance proves that there is adequate discipline within your organisation and that you can sustain relationships with stakeholders accordingly.

Forward thinking & innovation

Do you believe that corporate governance stifles creativity and innovation by default? If you do, you might be surprised to learn that this doesn’t have to be the case.

Corporate governance can ensure everyone is singing from the same hymn sheet, and that your business goals become common goals amongst your team. This in turn can actually promote innovation and encourage your team to go after new opportunities.

Guidelines to abide by

Do not underestimate the importance of having clear guidelines in place for staff and stakeholders to abide by. Roles and responsibilities should be assigned and clearly defined, and a transparent decision- making process implemented. This will, as a result, enable your team to maintain focus as your business evolves.

Risk management

Managing risk effectively can actually have a positive impact on your reputation. Rigorous procedures and formal policies, if employed properly, will reduce the risk of conflict, dispute and preventable error.

How can we help?

Often, it is all too easy to let the day-to-day running of your business cloud the bigger picture. The failure of a business, though, can be a devastating event that leaves financial difficulties and a whole host of worries in its wake. Therefore, it’s important that you take a step back and consider whether things are going the way that you would like.

We understand your challenges, so to explore how we might be able to help you and your business, take a look around our website, or contact us today to speak to one of our team.

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