Lack of corporate governance may prove costly — Sirdar

WHEN little thought is given to the negative effects of red tape, the problems it causes can be “huge”, says the group CE at Sirdar SA Group, Carl Bates.

Sirdar SA is trying to drive home the crucial need for good corporate governance among smaller businesses, as this is often an area that is overlooked as businesses focus only on the bottom line. The company is in the process of receiving entries for its annual governance awards for this year ahead of the ceremony on November 14.

Mr Bates said while red tape was often necessary for the effectiveness of the business community and also supports business owners to develop their businesses effectively, it was not good if it increased costs without supporting business growth.

“Increased business compliance costs, which increase prices and reduce profits, are a result of ill-conceived compliance requirements and a lack of understanding of the processes that must be put in place to ensure compliance,” he said.

“In the SME (small and medium enterprise) environment, so many of us have the skills we require to practice our craft, but without increased management skills and competence we are unable to effectively take our businesses to the next level.

“Therefore the continuous investment in our own professional growth is critical.”

His said the ideal solution to grow small business was to ensure that the stage of development was matched with the relevant support, while simultaneously increasing business and management skills so that businesses are ready for the next step.

“For success in business one must have independent advice. For smaller businesses that can be in the form of mentoring or coaching ( just make sure that whoever it is, is following a defined methodology and is not just a friend or neighbour).

“As you grow, a formal governance process (focused on conformance and performance) with independent directors becomes the natural next step,” he said.