Taking your Business from the
kitchen table to the Board Room
Corporate governance is about working on the business not in it. In other words, being strategic rather than operational. Your business may have grown from the "mum and dad's" business where the decision making was often done around the kitchen table, and has graduated to the boardroom.
As businesses grow and have more opportunities, it is recognised that outside expertise is required. Small business owners may be very good at what they do, such as building, transport logistics or making widgets, but Boards of Directors play a crucial role in enabling businesses to achieve their mission or purpose, whether that is to create wealth for shareholders, or to deliver valued services to stakeholders.
Governance is all about getting ahead. It is about:
# Knowing where you want to be and how you're going to get there.
# Good decisions made on the basis of a clear view of the "big picture".
# Identifying the right opportunities and going for them.
# Identifying risks and devising strategies to manage them.
# Putting the interest of your business ahead of the interest of the individuals.
Governance applies to all Companies regardless of their size. Businesses with a more formal structure tend to develop more quickly, and with a better and more clearly defined direction than those without.
To carry out the governance model you need Directors. Ideally an independent Director with the necessary skills and expertise is required. They have no financial interest in the success of the business; therefore their objective independent advice is more valuable.
The office of Director carries with it a wide range of duties and obligations â€" ethical, legal and commercial. The "tone at the top" influences the whole organisation. A Director must act in good faith, and in the best interests of the Company. A Director must also encourage openness to challenge, and independent thinking, contributing to decision making.
A good Board of Directors will help organisations achieve:
# Greater clarity of roles and responsibilities.
# A unified understanding of vision, purpose and strategy.
# Greater accountability and transparency.
# Better understanding of the compliance environment and risk management.
# Improved decision making.
# Enhanced team dynamics and communication.
# Improved leadership.
An independent Director in a family business should not be there to rubber stamp the will of the founding Director (perhaps the mum and dad owner). The point of the independent Director is to be objective, to see the bigger picture, and help achieve the bigger goals more quickly.
A Business Advisor / Chartered Accountant makes an ideal independent Director.
Hamish Pryde BBS, MInstD, CA (PP)