Good governance - or governance - is the key to sustainable growth and value creation within your company. It involves clear agreements, efficient processes and transparent interactions between the various actors and bodies within your company.
A thoughtful governance structure not only helps avoid conflicts, but also ensures that your company is strategically stronger, both in terms of risk management and stakeholder relations.
But what does this mean concretely for you as a business owner? How can you use governance to future-proof your business?
Why is governance important for SMEs and family businesses?
Many entrepreneurs think governance is only relevant to large companies. Nothing could be further from the truth. SMEs and start-ups also benefit from a clear governance structure. It ensures that:
- Roles and responsibilities are clearly defined
- Decisions are made thoughtfully and substantiated
- Risks are identified and managed in a timely manner
In family businesses, governance is even more important. In addition to business challenges, family dynamics also play a role. By drawing up a family charter, you establish clear agreements that bring peace and stability for future generations.
5 tips for getting started with governance
1. Avoid role confusion within your company
As an entrepreneur, you often wear several hats at the same time: you are a shareholder, a director and a company manager. This can lead to role confusion, not only for yourself, but also for your employees and business partners.
- Be aware of your different roles. Which cap do you wear in which context?
- Name responsibilities clearly. This prevents frustration within the team.
- Make sure there is a clear division of labor. Shareholders invest, directors set strategy and management executes.
Example: a common frustration within family businesses is that one shareholder works full-time in the company, while the other remains passive and yet shares in the profits. Making clear agreements here is essential.
2. Know the difference between an advisory board and a board of directors
An advisory board helps to better inform strategic decisions but has no binding decision-making power. A board of directors, on the other hand, carries greater responsibility and has legal obligations.
- An advisory board is a good first step in bringing in outside expertise
- A board of directors is necessary when a company grows and external directors or a CEO are appointed
- A strong chairman plays a crucial role in a well-functioning board of directors
Setting up an advisory board or board of directors requires preparation and clear expectations. Talk to an expert about this in advance.
3. Get involved in risk management
Every business faces risks. Cybersecurity, changing legislation, economic uncertainties and sustainability are just a few examples. Strong risk management helps you to:
- Identify hazards and develop action plans
- Increase customer, investor and employee confidence
- Respond faster and more efficiently to market changes
Sustainability is increasingly being incorporated into risk management. Companies that take a proactive approach to it not only gain image, but can also save costs and increase profitability in the long run.
4. Good agreements make good friends
Clear and unambiguous agreements prevent conflicts and misunderstandings.
- Shareholders best agree on profit distribution, share transfer and succession in a shareholder agreement
- Directors must establish clear strategies and long-term plans
- An owner's vision helps to structure the company's values and future plans
5. Manage family dynamics in a professional manner
In family businesses, emotional ties play an additional role in the operation of the business. This can lead to tensions and uncertainty, especially when transferring to the next generation.
- A family charter helps establish fundamental agreements
- Regular conversations between family members can avoid future conflicts
- The next generation can be incrementally involved in the management of the company
A strong governance structure helps align family interests and business goals so that both the company and the family benefit.
Conclusion
Governance is not a luxury, but an essential building block for sustainable growth and stability. Whether you're a start-up, running a growing SME or running a family business, clear agreements and structures help make your business successful in the long run.
Want to know how to apply governance concretely in your business?
On Thursday, February 27, Titeca pro accountants & Experts is organizing a pro Academy on the Buysse Code IV. The Buysse Code provides a pragmatic guide to good governance in unlisted Belgian companies. Co-author of the code Laura Lannoo and our pro experts Jurka Vanthournout and Matthias Wallaeys will give you tips on how to integrate the Buysse Code in your company.
All info can be found here.
