This eBook on Board Governance for Private Business is an insightful, fifteen minute read covering the top questions we get from private business owners on Corporate Governance. We regularly speak to groups of private business owners at conferences, meetings and through our consulting. The goal of this book is to provide information for private business owners who are considering a Board of Directors. It will also be helpful to owners who already have a Board and are wondering how to make it more effective.
Governance Idea #1 – The role of Board Governance
The role of a Board governance is oversight. Oversight makes the business more accountable – and valuable. There are three areas that a governance Board focuses on. They are covered in this eBook. Any business that focuses on these three areas will succeed (they are fundamental – there is nothing new about them). However, a common reason many businesses (and Board governance) fail(s), is that organizations and Boards over-value their focus on financial risk. That can be a mistake because financial risk tends to be a lagging indicator – generally something else has failed first. This eBook helps owners and Boards focus on the right oversight areas for their business before financial stress occurs.
Governance Idea #2 – Exits are better for well-governed private companies
Private business owners often become interested in governance for two reasons: they’ve reached a level of complexity where outside perspective is useful, and/or they are considering a future exit. Buyers appreciate well-governed companies. They appreciate the rigour that goes into running, managing and monitoring the business. It gives the company and its owners credibility. As a result, private businesses with good governance are more valuable on exit.
Governance Idea #3 – Objectivity is critical to Board Governance
Objectivity is the key to strong governance. Objective Boards are better able to see and react to risks and operating realities. To accomplish that, Boards (all Boards – public, private, not-for-profit) should include outside Directors. Outside Directors are independent of the business. They aren’t conflicted when it comes to making tough decisions. This eBook covers the key considerations for choosing valuable private company directors. Generally, there’s a set of skills and expertise that will be very helpful to the business. Identifying what those are and who has them is key to putting together a governance Board that is valuable as a private business owner.