What is it, why do I need it, and what does it cost?
Assume for a moment that you run a successful business. You work hard to develop customers, employees and suppliers. The business is growing, and you make a nice living. Well done!
So, what keeps you up at night? When you have a quiet moment to think about the future, what is your long-term plan for the business and how are you ensuring its continued success?
Here are some end-game options:
- Leave it to the kids
- Sell to employees
- Outright sale to another company
- Insolvency and bankruptcy
To achieve any combination of 1-4, you need to put in place a governance structure now. You need to demonstrate that your company is not just a successful personal endeavor, but a dynamic, thriving enterprise with a sustainable business model. While #5 is not something anyone plans on, in our many years of working with insolvent companies, not one has a governance structure in place. Without a plan for the future, failure is a possible outcome.
If you are handing the business to your children, putting it into the hands of employees, or selling to another company, you’ll need to plan for a smooth transition.You’ll need to ensure there is a structure and framework in place that helps them achieve continued successes. And you do want the next leaders to be as successful as you have been, to carry on your legacy, or because they paid you a lot for the assets. Many buyers won’t even consider buying a company without sufficient governance standards in place.
Governance assures repeatability, strategy development, and structure. It also provides you with a valuable sounding board so you can confide in someone about business issues that is not a spouse, employee, or fellow golf club member. It’s about making the best decisions on both the big and small issues that affect your business.
Are you willing to let someone share their wisdom and guidance to make you richer and your company stronger? Who wouldn’t? When looking at their personal health, most people do find value in regular physicals, even if the news isn’t always good. It’s the same for corporations.
Governance can take many forms:
- Board of directors / Advisory board (outsiders)
- Career coach / Peer group (Vistage)
- Financial advisor (Burke Capital)
All have value and generally there is some cost**. For the investment you’re making, you’ll get the benefit of regular, executive-level reviews of your business. The act of preparing an agenda, running an analysis of your business health, and presenting that information is an extremely valuable exercise. Especially when you are pressed to answer questions about your business model, customers, challenges and more.
In order to ensure the continued success of your business so that one day you can reap the rewards of your hard work, we strongly recommend a proper governance structure. Burke Capital has experience helping companies of all sizes defining and implementing a governance structure. To get started and review our process, reach out to Jim Burke at (650) 579-5699. Or email us at: firstname.lastname@example.org.
About Burke Capital Corporation
Burke Capital Corporation is one of the region’s most highly respected catalysts to business prosperity. For over 20 years, Burke Capital Corporation has provided capital, expertise and management to enable significant client performance gains, often in very challenging times. For more information, go to burkecapital.netor call us at (650) 579-5699. The company’s corporate headquarters is located in Burlingame, California.| 1021 Burlingame Avenue, Burlingame, CA 94010 |135 Main Street, 9thFloor, San Francisco, CA 94105 © 2019
* For this discussion, the most important elements of a governance structure are having documented processes, an outside board of advisors and a management succession plan.
**For a $25 million revenues company, the quarterly cost of each board member ranges from $2,500 to $10,000, depending on the number of meetings. The other options are priced based on time commitment and value. On the topic of cost, we love the expression: “if you think education is expensive, have you priced ignorance lately?”