The Importance of Good Business Governance

Governance is the foundation for the activities of a business. This includes all the checks and balances, the structures put in place to ensure that the business is meeting its goals and avoids problems and also any tasks that are focused on ‘big issues’ like creating long-term plans or tackling risk. You’ve probably been carrying out governance functions since the beginning of your business, whether or whether you’re aware of it. As your business grows, your governance requirements will also increase. Governance can be a part of any structure you choose, from sole proprietorship to a full board of directors. It is crucial to to plan your governance procedures carefully, and think about the various options that could play out for you in terms of your growth plans.

As a company grows its governance becomes more complicated and requires more attention and resources. For instance, if your company has become a publicly-listed entity with thousands of shareholders, multiple share classes, and various lenders you will have to establish robust procedures for shareholder engagement. In addition, you’ll need to have the proper people at the table Top-quality directors with the required experience and skills.

Implementing good governance practices enables the company to operate in its best interests and enhances its performance by bringing greater stability, productivity and trust. It also makes a business more attractive to investors of the highest level and reduces the cost of capital. It also increases transparency and allows for a rapid reaction to any crisis or disputes.