You need to be sure that the board knows what the shareholders want and that management knows what the board is doing. You should have agreed processes for engaging with stakeholders including external parties, And your board must understand their roles and responsibilities. Good governance to coin a phrase.
Put simply, good governance involves the rules, practices and processes by which a company – whatever its size – is directed and controlled. In reality you can’t afford to ignore good governance as it can impact business performance and development and ultimately its value.
It needn’t be complicated and we can help you devise a tailored approach so you have better stakeholder engagement, more effective monitoring and measurement of performance and better risk management.
THE FAMILY BUSINESS
Running a family business can be challenging as well as rewarding. Aside from the normal commercial and managerial challenges of dealing with the business and employees, you also have a group of family members to manage. The challenge is how you plan for and drive a great business and ensure that the family are behind you and aligned with your strategy.
There are specific opportunities and challenges, but understanding the particular dynamics of family businesses will stand you in good stead as your business grows.
AN EFFECTIVE BOARD
A great board can be a huge asset, providing clear direction and support to your wider team, while an ineffective board can act as a barrier to growth.
The board has to be clear about shareholders’ priorities and what’s expected of them, whether they’re family or non-family shareholders. The board also needs to guide and hold management to account, and managers need to understand the priorities of the board. Everything should be underpinned by good board practice – having a good chair and being clear about board members’ responsibilities.
Not every business has, or wants, a formal board but the best principles and behaviours can always be applied.
GREAT SHAREHOLDER COMMUNICATION
All businesses need to communicate with their owners – the shareholders. In PLCs there’s a formal process for doing so, but in private businesses this isn’t the case.
Keeping shareholders up to date with what the business is doing is essential. If they stop being convinced that the business is being run well, they can replace the management and the board. If there is no clarity on business strategy and priorities, then shareholders needs may not be satisfied. In a privately owned business this is about great personal communication as well as the more formal kind.
You should know the priorities and requirements of your shareholders be they family, private equity or colleagues. They are integral to your success.
You and the business need to undertake short-term and long-term succession planning. You need to develop the skills of senior and middle management to make sure that they’re ready to take the reins when needed. That could mean providing external experience, development training, skills enhancement or secondment to other parts of the business, or indeed in other businesses.
In family businesses succession planning can be more complex. Consider if the next generation of leaders will come from within the family or if you need external expertise to augment the talents available.
Strong governance can protect your business by creating a robust system of controls and processes, but it can also enhance value. Banks, potential investors and possible purchasers value these elements of governance and if they have concerns it can lead to reductions in value or present other difficulties.
Strong governance processes should not get in the way of dealing with the day-to-day priorities of running the business and will in fact, if constructed with care, deliver value across the business.
PURPOSE, VISION AND GOVERNANCE
Your colleagues, customers and other stakeholders expect more of you now than ever before. Businesses are expected to be contribute to the communities where they operate, and to be good corporate citizens. There are many good examples of businesses making a positive difference and of course others, where poor behaviours have destroyed value.
Putting your purpose and vision for the business at the core of your strategy is important as you seek to grow, to attract new talent and to position your brand for the future. This can be a real competitive advantage.