Understanding “Business” is Corporate Governance

Hello, I’m Peter Towers, Managing Director of ESS Small Business and ESS BIZTOOLS.  Welcome to Empowering SMEs.

Directors of small/medium enterprise companies, committee members of not-for-profits, charities and sporting organisations need an overall understanding of “business” to carry out their duties.

An understanding of “business” is what “corporate governance” relates to. 

Many directors and committee members do not fully appreciate the wide range of items that they are legally responsible for, once they are appointed a director or committee member.  It is this awareness and understanding of a director’s key role and responsibilities that we’re trying to articulate through the series of webinar/workshops on “corporate governance”.

The webinar/workshops will look at the key issues relative to an understanding of “business” so that directors or committee members can confidently perform their roles.  An understanding of issues like:

• the Law – whether it’s the Corporations Act, Association Incorporation Act, Environmental Laws, Privacy Act
• Structures of Organisations – whether it’s a proprietary company, a crowd sourced funding company, an early stage innovation company
• Taxation – taxation affects all of us, but there are some harsh penalties for company directors if some taxation payments are not paid
• Board of Directors or Committee Meetings, processes, declaration of interest, recording of motions, assembling of board reports. This also involves the company secretary’s role, a very important person in an organisation is the company secretary.
• Financial Matters - having an understanding of financial matters is very important for a director/committee member to be able to perform their duties. That doesn’t mean that you have to be able to prepare the financial accounts, but you do need to be able to read and analyse those accounts and know what message is being conveyed via them.
• Workplace Health & Safety – understanding the regulations, making sure you make sufficient enquiries of your managing director or CEO that the appropriate systems have been implemented so that your organisation complies with the Workplace Health & Safety rules.
• Marketing and Selling – there is no business unless there’s a sale. To make a sale, there normally needs to have been marketing activities.  Marketing embraces many issues:
• social media
• newsletters
• websites
• media releases
• brochures

Should all conform to an overall concept.  You might even include videos as part of the marketing strategy of your company or organisation.  It is then very important that an organisation has a clearly defined sales mechanism, as sales need to be made to keep the cashflow moving.

• Funding – there are government grants, there are non-government grants. Companies can raise capital as early stage innovation companies, crowd sourced funding companies or utilising Section 708 of the Corporations Act.  Directors therefore need to have an understanding of the funding options that are available to their organisation.
• Risk Management – insurance covers, personal property securities register awareness as to which of your organisation’s assets are potentially at risk if they’re not registered on the government’s personal property securities register. Then having a general appreciation of the other areas of risk that pertain to your company/organisation.
• Market – what’s happening in the market? Are new competitors coming to town?  Has one of your competitors appointed a new board of directors or a new CEO?  What changes do you expect to occur from these changes?  What affect will this have on your company or organisation?
• Shareholders/Members – many companies have shareholder’s agreements. Are you aware of what’s in that agreement?  Is the “spirit of the agreement” being implemented?  Is there appropriate communications being conveyed to shareholders and members?  Are you fully utilising the “power of the internet” via your website?  Is there a members’ only area that can only be accessed by password and username, so that you can be communicating with your shareholders/members throughout the year?
• Planning – your business plan or strategic plan, budgets and cashflow forecasts. What is your company or organisation trying to achieve?  Have they developed a 3-year or 5-year plan? 
• Most importantly, People or Team Members – are the directors aware of the Fair Work Australia requirements? Have appropriate human resources’ systems been implemented?  Are reports submitted back to the board of directors/committee on a regular basis as to what is happening with the team?