Small businesses often challenge the value of governance as their organizations are generally intimate enough for management to argue that they have the proverbial “finger on the pulse” of the organization.
Unfortunately, that management style doesn’t come without its challenges
and, with increasing uncertainty in the marketplace, the need for more timely, reliable information and financial assurance is critical for survival.
Family businesses, in particular,
don’t see the relevance of governance in their organizations.
Many roles throughout the organization are filled by family members and other key personnel. There is an assumption that trust and transparency are visible throughout the organization and the need for accountability is just another unnecessary layer of management.
Medium-sized business see the potential benefit, but lack the resources, namely time and competency. They often hesitate to make the investment without the assurance of a tangible return.
Those who are eyeing an Initial Public Offering (IPO) understand that strong governance can attract investors or buyers, but unfortunately many wait until they are certain of a prospective sale or investment, prolonging the transaction and incurring substantial costs in a short period of time as they play catch up.