Corporate Governance and Small Businesses

We begin with some comments on what types of companies primarily drive the U.S. economy -. We know that there are about 16,000 listed companies represented on the NASDAQ, NYSE and Amex -. The key economic drivers in the United States has 27 million small businesses -. The Small Business Administration 2008 Report on Small Business Economics Presidential clearly informed "the economy has generated 1.1 million new jobs in 2007 in the first quarter of 2007, 74 percent of new jobs were small businesses with less. over 500 employees and 22 percent were in firms with fewer than 20 employees "-. However, the gross amount of attention in the media and the federal bureaucracy is around what is happening in the markets -. This is understandable with the volumes of $ transition in this public environment. The economic recovery program is not addressing the core of the economy, small businesses -. More than ever the public market environment has been questioned on corporate governance -. The new legislation under consideration for public companies has sections that may very well trickle down and require small businesses to adhere to similar if not precise rules on Corporate Governance.

A simple definition of Corporate Governance for small business: -

Corporate governance refers to simply the set of internal policies, rules and procedures that a company follows on a regular basis to ensure that operates in a fair, equitable and appropriate for the benefit of the company, its management and its shareholders. A company usually has a board of directors and senior management team "C" level -. Many small businesses do not have these clearly defined functional and organizational entities -. For private companies that are registered as a company and have the investors, many states require these entities to have a board of directors -. Yet many small businesses to integrate issues of taxation and not necessarily pay attention to the concepts of corporate governance. -

How Corporate Governance applies to small businesses? -

All businesses should look at their organizational structure and continually evaluate what will allow the company to perform optimally -. The easiest way to implement this is to have an advisory committee -. The Advisory Board is non-paid people who have business or industry-specific backgrounds who can contribute with ideas or managing mentor -. In the most formal and traditional small company has a Board of Directors composed of the founders, a spouse, an employee and maybe - just maybe an outside director. - The focal point of corporate governance in small companies is that all companies need to set strategic business objectives, provide leadership to implement them, supervise the management of the business, and if the company's shareholders, report to shareholders on their management -. For those small businesses that do not have the hierarchical structure of plans to implement formal corporate governance, it is recommended that periodic self-evaluation of the company will be the starting point of responsibility, to improve performance, make the company grow and be a contributing to the greater economy -. At the end of the day, if you follow a set of policies and procedures and the management of companies are reporting to someone even if it's your dog, then you have the responsibility that is key to corporate governance practices.

Will the government impose its will and the definition of Corporate Governance by the public markets in the world of small business?

This imposition of government by the public company market in private company is making its way through the halls of Congress -. An idea to be labeled on the current legislation is to extend Sarbanes-Oxley down to unlisted companies -. Anyone who knows anything about SOX is aware of the high cost to implement the processes of documentation and reporting -. Pressing this up to the small business would be prohibitively expensive and stunt economic growth -. The general policies of corporate governance mandate is to wait and see how the new legislation will affect small businesses that drive the U.S. economy.

As a final note, every company, regardless of the size you will see the positive effects of implementation of the principles of corporate governance -. The facts remain that there are more than 27 million small businesses in the United States, who are the creators of jobs and the economic engine -. The size of the business of the United States is running at its best when individuals come together in a context of free market to meet the needs of the economy and society -. In the end, the best practices of corporate governance can be freely implemented for the benefit of the company or corporate governance can be established by the government, which can cost more resources, planning and profit -. Take time to assess how your small business sees corporate governance and how this will improve your growth in the market .......