Why is Startup Governance Important?

There are a lot of new terms and ideas to wrap your head around when launching a startup, but there’s one you need to give your attention to and try to implement early on: startup governance.

What is startup governance?

Governance is a preset outline of any rules & regulations, a code of ethics and transparency that will help the company function without running into trouble. This may detail how much power or responsibility its founding members may have and how each will take steps to enforce the rules included in the governance document.

Please see our Blog Post    What is Corporate Governance in Business

Why do small startups need such a ‘corporate’ idea?

Most people have heard of governance as a good strategy for big business and multinational corporations but never think to use it on their own smaller businesses, in fact they may even look at it as an annoyance, inhibiting their growth and being a source of unnecessary paperwork.  Nothing could be further than the truth however.  The principles of startup governance can be implemented informally.  They can be formalized as the startup matures.  This will help your business from day one and smooth the sometimes complicated path to growth and financial success.

Here’s just a few things governance can help with:

Small business governance helps with legal challenges

A lot of startups struggle to keep up with all the different laws and rules set forth by government and regulatory groups. Governance experts advise the setting up of advisers to help advise the founders on these aspects.  This can be done informally by the startup’s lawyer and external accounting/financial adviser.  It is helpful to have this advice from an outside team as they are neutral and will cut through any mismanagement or personal conflict the founders may have created.

Small business governance can ensure correct financial reporting.

Business startups are not always the best at keeping track of expenditures and takings, reports and financial forms. Simply making it part of their governance to regularly have a book keeper or auditor to process finances will help them keep on top of it. This will ensure they are operating at optimal financial levels and encourage all employees to act transparently.

Small business governance will encourage future growth.

The aim of most new startups is to expand and grow in the future. By implementing governance founders are investing in the health of their company so it can expand in the future free from any legal, financial or regulatory complications, it will allow them to know when to make the next steps without issue.


Corporate governance is no longer restricted to big companies in giant boardrooms, any fledgling startup today regardless of its size, needs to implement the principles of good small business governance.



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