Governance important for SME success

George Hay Chartered Accountants

In today’s business landscape, we are no stranger to stories of business failure and company collapse and it’s not just smaller enterprises that are experiencing this, but some of the most well-known names.

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

What is corporate governance?

In broad terms, it refers to how a business is managed and the systems and processes that are implemented to support that. Good corporate governance, in many respects, is essential for the maintenance of a stable economy, as it allows businesses to be flexible, adaptable, resilient, responsive and, therefore, sustainable.

The benefits of good governance

Whilst it’s true that corporate governance is very much geared towards big business, this isn’t to say that SMEs cannot benefit from adopting some form of governance arrangement that is suited to their needs.

A study by the Association of Chartered Accountants (ACCA) found that a lack of understanding, along with limited time and resources, leads many SMEs to jeopardise their future success as they fail to adopt effective processes and good governance practices.

Effective governance practices and solid internal controls should serve to protect and future-proof your business. Your strategy should mitigate risk, promote better decision-making and ultimately help you to achieve better results for you and your team.

Opting in to corporate governance can be key to long-term and often faster business growth. If done properly, it should enable you to visualise where you are headed, break your goals down into achievable objectives, align your processes accordingly, monitor your progress and adapt as the world around you changes.

Whilst some smaller businesses realise that good governance is important, they remain unsure about how to put it into practice with 49 per cent of those surveyed saying that they do not involve external advisers in their strategy discussions.

How can we help?

Often, it is all too easy to let the day-to-day running of your business cloud the bigger picture.

That being said, the failure of a business can be a devastating event that leaves financial difficulties and a whole host of worries in its wake, so it’s important to take a step back and consider whether things are going the way that you would like.

Whether you’re a start-up, or an established company, we can work with you to consider your next move, formulate your strategy and develop your business. We are highly experienced in putting together management accounts, cash flow forecasts, business plans and due diligence reports to help you make the right decisions for your business.

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.

Link: https://www.accaglobal.com/uk/en/professional-insights/risk/governance-needs-of-smes.html

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