"Drive the business or it will drive thee."

(Benjamin Franklin)

Why should SMEs even bother with (Corporate) Governance?

There are a couple of reasons why Corporate Governance should be a hot topic for smaller businesses. In the following, you will find some of the most important benefits from establishing and maintaining a well-functioning Corporate Governance framework:

  • often seen as less rigorous by investors, access to sources of financing can be difficult and more costly to obtain for SMEs as trust in their business is yet to be built, or, because smaller businesses are generally considered less trustworthy than well-established larger companies
  • long-lasting relationships with third parties and a good reputation are easier to build when a company demonstrates strong Corporate Governance
  • good Corporate Governance helps a company to protect its assets from the financial and reputational costs of unintentional errors or fraud
  • adequately defined roles and responsibilities of each family-member whether they are actively participating in the business or not and/or between owners will help avoid conflicts of interest
  • well-set objectives and a clearly defined strategy will foster faster growth of the business
  • for very small structures (very small PLCs, LPs, LLPs, and sole proprietors), being accompanied by someone with expertise in Corporate Governance and business administration in general can be of great value and will free time to be able to focus on the core business, etc.
SMEs generally give priority to managing urgent business matters, generating cash flow and managing their day-to-day operations overall. Tight budgets, the lack of good corporate governance expertise and/or the necessary human resources to carry out any projects in this area are other common hurdles to implementing simple but effective measures to ensure adequate management and protection of your organization and its stakeholders.

Having said that, for small structures Corporate Governance comes along with a particular focus on enhancing the efficiency of their business, and improving its performance. Within the ever-changing environment in which these companies evolve, they need a more tailored approach depending on their size, set-up and particular needs.

If you are interested in hearing more about how Plumeria can help you strengthen your Corporate Governance framework, please send an email to: