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Governance: Key things to review if you do it yourself

Governance: Key things to review if you do it yourself

Not all businesses have formal governance with a board of directors. Even if you do it yourself, governance is worth taking seriously, to review the ‘big picture’ of your business regularly. Here’s how.

What is do-it-yourself governance

Do-it-yourself governance means regularly reviewing how your business is performing, using advisors or other business owners to help. This approach to governance is less structured than having an advisory board or a medium or large board of directors — but that doesn’t mean it’s less important.

Set yourself up well

Make sure you have your basics in order first. Understand all your duties as a director, like acting in good faith, meeting your commitments and trading sensibly.

Lay the groundwork for good governance, for example document your plans, measure your business performance and manage risks.

Review the big picture of your business regularly

How often do you need to review your business to oversee it effectively? That depends on how quickly your business is changing, and whether you’re reviewing the whole business or just one part. For example, you might regularly check the basics, and then review each part of the business in more detail when you can.

Big decisions can also be a good prompt to review how your business is operating. For example, before seeking investment you should check your planning is sound and that you have the business risks under control.

Ultimately, you’re best-placed to decide when and how often to review the ‘big picture’ of your business. Try starting with a relatively small scope for your review to get a feel for the time it takes.

Find the time

Although governance is important, finding the time to review your business can be a challenge. You’re likely to have many competing demands on your time. Try delegating other tasks if you can. Set time aside well in advance, so you can plan your everyday work around the review. Creating an appointment in your calendar app can help. Something you could do straight away, if you’re just getting started. Allow time before the review for preparing figures or collecting other information. Avoid known busy times, like year-end.

Some people like to set aside more time than they think they’ll need. That gives you a little flexibility to fit in any urgent tasks without cancelling the review.

Share the task

Get someone to help you review your business. It could be another experienced business owner you know, or a professional advisor. Trying to do it alone leaves you at risk of blind spots, focusing too much on specific areas, or letting your personal views cloud an objective review. A second opinion improves your insight and your confidence in the review.

Booking review time with someone also helps you escape day-to-day pressures and commit to spending the time wisely.

Two friends having a beer with iPads out and some pencils and pens on table

Set an agenda

Set an agenda before meeting to review how your business is operating. An agenda can:

  • help you see what info you’ll need to gather, so you can prepare well
  • keep you on track and make your meeting more efficient
  • form a written record of what you cover and give you a starting point for note taking.

Once you’ve drafted an agenda, check whether the planned time is enough for everything you want to cover. You’ll see if you need to reduce the scope, or allow for more time.

Share your agenda in advance

Send your agenda to the other people involved in the review, so they know what you plan to focus on. They might have feedback about a topic you’ve missed or whether your focus is in the right place.

Your agenda helps them gather notes and prepare for the review. It also reassures them that their valuable time will be well spent.

Get a head start with a template

Use our agenda template to help you plan your review meeting. The template will:

  • prompt you about topics and questions you might want to cover
  • let you adapt the agenda topics or add your own
  • let you plan how long to spend discussing each topic
  • give you space to document key points and actions.

Do-it-yourself business review — agenda template [DOCX, 222 KB]

A good agenda can make the difference between a quick, effective meeting and a frustrating one that runs over time.

A good agenda can make the difference between a quick, effective meeting and a frustrating one that runs over time.

Review the right things

The key things to review are your:

  • market performance and direction
  • products and services
  • operations and efficiency
  • finances
  • people.

Together, these topics help you keep across your whole business.

Your market performance and direction

Look at your sales results, which markets to aim for next, and how to improve your market performance. For example, you might need to decide whether to enter a new market or focus on growth in an existing market.

Compare your sales results to any plans or objectives you set previously. What caused any particularly good or bad results? What can you do to repeat success, or to combat problems? If you haven’t set any plans or objectives, this is a great time to do it. Then you’ll have something to work towards, and to review next time.

If you’re considering new locations as your focus for growth, you might like the online ‘Market Mapper’ tool from Stats NZ. This tool helps you find the areas where your potential customers live.

Market Mapper(external link) — Stats NZ

Your products and services

Look at how well your existing products meet your customers' needs, and how long they’ll continue to. For example, you could review customer satisfaction results or data about people’s purchasing intentions. Do you have plans for improving or replacing products and services that need updating?

How do you compare with competitors? Think about local competitors but also keep up with developments in your sector overseas. These can be a great source for new ideas, or an early warning of potential threats.

What are the overall trends in the sector? Are you well placed to keep your position in the market?

Your operations and efficiency

Review your premises, your methods, the technologies you use, your processes, your IT and your quality.

Are any internal issues holding your business back? Perhaps more efficient alternatives to your current technologies are on the way. Maybe your IT setup is obsolete or has poor support? Have you gained process experience that means you could improve output? Is your quality an asset or a problem overall?

From time to time, you might want to check your premises are still a good fit for your business. Are you likely to outgrow them soon? Do you risk having to move for other reasons?

Your finances

Review how your business is financed, levels of retained profit, the sales income generated and whether your cash flow is healthy. Are you happy with your finances? How do they compare to your budgets? Do you need to change anything to keep your cash flow healthy?

If you’re seeking funding for a project, either from investors or through a loan, healthy finances help prove your business is under control and doing well.

Your people

Review your organisation structure, people planning issues, health and safety and training and development.

Have your structure and staffing kept up with growth or other changes in your business? Are you growing, retaining, and developing staff as well as you’d like? Do any particular staff members need any special attention? Are you planning well ahead for any hiring, so you aren’t doing it under pressure?

Don’t lose sight of governance when the going gets tough

Don’t lose sight of governance when the going gets tough

Operational issues can be all-consuming when your business is growing or when you’re in crisis mode. But your decisions at those times can affect the performance and sustainability of the business for a long time. Give strategic decisions the time and attention they need, and ask for advice if possible.

Know your risks

All businesses need plans and processes for managing risks. It’s part of the groundwork for good governance.

The risks you cover in your business review could be operational or strategic. Think about problems or near misses you’ve already encountered, what types of fraud you could be vulnerable to, and any legal risks you face.

If your business is small, you may review your risks as part of your regular business review. You’ll decide how to handle each risk, and whether you’re prioritising and managing them correctly. As your business grows, you may need someone else to manage the detail for you. A regular report about risks could give you key figures (like the number of new risks identified) and explain any critical or unmanaged risks.

Risks and do-it-yourself governance

As a director, you’re personally responsible for managing risks around health and safety and ensuring the business can always pay its bills. Insurance helps, but directors can still face the consequences of getting these wrong.

If you’re overseeing your business yourself, you’re probably directly involved in managing these risks. On the upside, you should have a good idea of everything important as long as you don’t lose focus.

Take the time in your review process to identify any risks you aren’t already managing. Document and manage those risks carefully, without letting the details overwhelm you.

Sometimes the most important skill is recognising when to be less involved. If you have staff, you could involve them in managing risks. You could ask another business owner to identify risks in your business for a fresh perspective, while you do the same for their business. Or you could take a more structured approach to governance and involve advisors who know about risk management.

Worksheet: identify, prioritise, control, and monitor your risks

Case study

Case study

Mai revisits her treatment of health and safety risks

As Mai’s food truck business has grown, she’s begun holding monthly reviews with the team leader for each truck. These focus on the bigger picture, while an additional quick call each week covers operational details.

Mai ends one of these monthly reviews frustrated to hear about another safety near miss with inexperienced staff using a deep-fat fryer. She thought she’d solved that problem with staff training and better procedures written up and on display. But her staff have changed since she held the training, and some of the new staff don’t realise how important the processes are.

Mai realises she needs a bit more structure in how she manages and monitors risks. She goes back to her risk register’s entry about staff using the fryer without training, and makes a note that the immediate solution didn’t work. She adds a plan to monitor her management of the risk better. Going forward, she'll check in every 3 months, and every time she hires a new staff member.

Mai realises a similar risk might apply to other areas too. She decides to write an introduction pack for new starters that all new staff can use to get up to speed. She also decides to hold safety training regularly to train new staff and refresh existing staff. She’ll also monitor all the risks in her risk register at least every 3 months so she can check if each solution is still effective. And for new risks, she’ll think carefully about how to make any solution an enduring one.

Record key points

Record what you discuss during a review of your business. Include the topics you cover, decisions you make, and any action points. Recording key points is worth the time it takes. It gives you a great starting point for your next review and sets out the important tasks to do before then. Failing to record key points could mean that important actions go undone, undermining the point of doing the review.

How you record key points is up to you. You could ask someone to come along just to write stuff down, or you might record the meeting on your phone using a voice-recorder app. You could use the agenda template on this page, if that works for you.

Ask the others who were at the meeting to check the notes to help you catch anything you missed and keep the notes objective.

Follow up your review

Do-it-yourself business reviews are valuable for the insight they can provide. But to get lasting improvements you need to make a plan and stick to it.

If you’ve recorded actions, set a schedule of doing them and follow up.

Set a date for the next review, and write down key topics to cover. Set yourself a calendar reminder to finish any open actions in time for the next review.

A quick debrief can help you make sure your reviews are working for you, and not the other way around. Think about what went well, and what you might improve next time. Ask the others who were at the meeting too. Don’t panic if your first review isn’t perfect.

More structured governance

Do-it-yourself business reviews are a good first step, better than not doing any work on the ‘big picture’ of your business. But getting experts on board in a more formal way is a better long-term option.

Adding structure to your governance helps you separate governance work from managing your operations. You’ll enjoy consistent support from experienced advisors, and they’ll be committed to keeping your business running well and able to face challenges.

You can get started with structured governance by setting up an advisory board. Or you might go further and add to your board of directors. Which one is right for you depends on whether you need formal decision-making or just good advice.

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