| Let's start with some review of what types of | | | | spouse, an employee and maybe - just maybe an |
| companies primarily drive the US economy. We know | | | | outside director. The focal point of corporate |
| that there are about 16,000 publicly traded companies | | | | governance within small businesses is that all |
| represented on the NASDAQ, NYSE and the AMEX. | | | | businesses need to set company strategic goals, |
| The key economic driver in the US is the 27 million | | | | provide the leadership to put them into effect, |
| small businesses. The Small Business Administration | | | | supervise the management of the business, and if the |
| 2008 Presidential Report on The Small Business | | | | company has stockholders, report to the stockholders |
| Economy clearly communicated "the economy | | | | on their stewardship. For those small businesses that |
| generated 1.1 million net new jobs in 2007. In the first | | | | do not have the hierarchical structure in place to |
| quarter of 2007, 74 percent of the net new jobs were | | | | implement formal corporate governance plans, it is |
| in small firms with fewer than 500 employees and 22 | | | | recommended that regular self assessment of the |
| percent were in firms with fewer than 20 employees." | | | | company will be the starting place for accountability, to |
| Yet, the gross amount of attention in the media and | | | | enhance performance, grow the company and be a |
| the federal bureaucracy is around what is happening in | | | | greater contributing force in the economy. At the end |
| the Markets. This is understandable with the volumes | | | | of the day, if you follow some set of policies and |
| of dollars transitioning in this public environment. The | | | | procedures and are reporting your stewardship of the |
| economic recovery program is not addressing the | | | | company to someone even if it is your dog, then you |
| core of the economy, small businesses. More than | | | | have accountability that is key to corporate |
| ever the public market environment is being questioned | | | | governance practices. |
| about corporate governance. The new legislation being | | | | Will the government impose its will and definition of |
| considered for public companies has sections that may | | | | Corporate Governance from the public markets into |
| very well trickle down and require the small businesses | | | | the small business environment? |
| to adhere to similar if not exact rules on Corporate | | | | This imposition of government from the public market |
| Governance. | | | | companies to privately held companies is making its |
| A simple definition of Corporate Governance for the | | | | way through the halls of congress. One idea being |
| small business: | | | | tagged onto present legislation is to extend |
| Corporate governance simply refers to the set of | | | | Sarbanes-Oxley down to privately held companies. |
| internal policies, rules, and procedures that a company | | | | Anyone that knows anything about SOX is aware of |
| follows on a regular basis to ensure that it operates in | | | | the high cost to implement the documentation |
| a fair, equitable, and appropriate manner for the benefit | | | | processes and the reporting. Pushing this down to the |
| of the company, its management and its shareholders. | | | | small business environment would be cost prohibitive |
| A corporation usually has a board of directors and a | | | | and stunt economic growth. The general politics of |
| senior "C" level management team. Most small | | | | mandated corporate governance is to wait and see |
| businesses do not have these organizational entities | | | | how new legislation will affect the small businesses |
| clearly defined and functional. For private companies | | | | driving the US economy. |
| that are registered as a corporation and have | | | | As a final note, every company, no matter what size it |
| investors, the various states require these entities to | | | | is, will see the positive effects of implementing the |
| have a governing board. Yet many small businesses | | | | principles of corporate governance. The facts remain |
| incorporate for tax issues and do not necessarily pay | | | | that there are 27 million plus small businesses in the US |
| attention to the concepts of corporate governance. | | | | who are the job creators and the drivers of the |
| How does Corporate Governance apply to small | | | | economy. The greatness of US business is that it |
| businesses? | | | | performs the best when individuals come together in a |
| All businesses should look at their organizational | | | | free market environment to meet the needs of the |
| structure and continually assess what will allow the | | | | economy and society. In the end, best practices of |
| company to perform in an optimal way. The simplest | | | | corporate governance can be freely implemented to |
| way to implement this is to have an advisory board. | | | | benefit the company or corporate governance can be |
| The advisory board is non-paid individuals that have | | | | instituted by the government, which can cost more in |
| business or industry specific backgrounds that can | | | | resources, planning and profit. Take the time to assess |
| contribute ideas or mentor management. In more | | | | how your small business views corporate governance |
| formal and traditional cases a small corporation has a | | | | and how this will enhance your growth in the market |
| board of directors comprised of the founders, a | | | | place. |