Skip to main content
BusinessSME

Corporate Governance for SMEs: Driving Growth Through Effective Practices

By 20/08/2024September 16th, 2024No Comments
corporate governance for smes: driving growth through effective practices

Corporate governance encompasses the systems, processes, and principles by which companies are directed and controlled. Corporate governance is often associated with large corporations, but its principles are equally vital for small and medium-sized enterprises (SMEs).

At Equil Advisory, we encourage our SME clients to integrate these governance principles effectively into their operations. Effective governance can drive growth, improve transparency, and build trust among stakeholders. This article explores key aspects of corporate governance tailored for SMEs, highlighting how they can benefit from adopting robust governance practices.

The 8 Principles of Corporate Governance and why you need them

The ASX Corporate Governance Council outlines eight fundamental principles of corporate governance. SMEs should adopt these principles to strengthen their governance framework.

1. Lay Solid Foundations for Management and Oversight

Clearly defining roles and responsibilities within an SME’s board and management team is essential. When done right, it can lead to streamlined operations and better alignment with strategic goals. For instance, one SME that clearly outlined the duties of its leadership team avoided conflicts and improved decision-making. As a result, the company was able to focus on growth initiatives without internal distractions.

However, the absence of defined roles can lead to serious issues. Another SME faced chaos when responsibilities were unclear, leading to duplicated efforts, missed opportunities, and frustrated staff. This lack of clarity not only slowed the business down but also led to poor performance and a decline in morale. By establishing clear boundaries and regularly reviewing performance, SMEs can maintain effectiveness and accountability, preventing these pitfalls and positioning themselves for success.

2. Structure the Board to be Effective and Add Value

An effective board is crucial for any business, regardless of size. When SMEs assemble a board with a diverse mix of skills, knowledge, and commitment, the results can be transformative. For example, one SME that brought in board members with expertise in finance, marketing, and technology saw rapid growth and innovation. The diverse perspectives helped the company navigate challenges and seize new opportunities, leading to a significant increase in market share.

However, getting it wrong can have dire consequences. An SME with a poorly structured board, lacking diversity in skills and perspectives, found itself unable to adapt to market changes. This misalignment led to poor decision-making, stunted growth, and eventually, financial losses. By assembling a board that adds real value, SMEs can benefit from strategic insights, support growth initiatives, and ensure robust oversight, all of which contribute to long-term success.

3. Instil a Culture of Acting Lawfully, Ethically, and Responsibly

Building a culture that prioritises lawful, ethical, and responsible behaviour is vital for any SME. When done right, it can create a strong foundation for trust and long-term success. For example, one SME that invested in regular ethics training and established clear policies saw a significant boost in employee morale and client loyalty. This commitment to ethical behaviour also attracted new partnerships and created a positive reputation in the industry.

Conversely, neglecting this aspect can lead to serious repercussions. An SME that overlooked ethical standards found itself embroiled in a legal scandal due to shady business practices. This not only damaged its reputation but also led to financial penalties and a loss of key clients. By fostering a culture of ethics and responsibility, SMEs can protect their reputation, build stronger relationships with stakeholders, and create a sustainable path to success.

4. Safeguard the Integrity of Corporate Reports

Accurate and reliable corporate reporting is essential for maintaining stakeholder trust. When SMEs implement rigorous processes for financial and non-financial reporting, the benefits are clear. For example, one SME that prioritised transparent reporting and regular audits gained significant investor confidence. The accuracy of their reports led to a successful round of funding and strengthened relationships with key partners. Additionally, when it came time to sell the business, the well-maintained, accurate reports made the due diligence process much smoother and faster, attracting more buyers and achieving a higher sale price.

However, failing to safeguard report integrity can be disastrous. Another SME that neglected internal controls and skipped audits found itself in a financial crisis when discrepancies were discovered in their reports. This eroded trust with investors and customers, leading to a sharp decline in business. By ensuring reports are accurate and timely, SMEs not only build confidence among stakeholders but also protect themselves from potential financial and reputational damage.

5. Make Timely and Balanced Disclosure

Transparency is crucial in corporate governance. When SMEs provide timely and balanced disclosures, they build trust and strengthen their reputation. For example, an SME that consistently communicated financial performance and strategic changes with its stakeholders saw increased investor confidence and customer loyalty. By openly sharing both successes and challenges, the business managed expectations and maintained strong relationships.

On the other hand, failure to disclose relevant information can backfire. An SME that delayed sharing critical operational changes faced backlash from investors and customers once the news broke. This loss of trust led to a drop in business value and strained relationships with key partners. By committing to timely and balanced disclosure, SMEs can foster transparency, manage stakeholder expectations, and support their strategic direction with confidence.

6. Respect the Rights of Security Holders

Respecting the rights of stakeholders is crucial for any SME. When businesses ensure stakeholders have access to relevant information and a voice in decision-making, the relationship strengthens, leading to long-term engagement. For example, an SME that actively communicated with its stakeholders and encouraged their input saw increased support and loyalty, resulting in smoother decision-making and better overall performance.

Conversely, neglecting stakeholder rights can damage relationships and trust. An SME that failed to address concerns and withheld information faced backlash, leading to strained relationships and a loss of key investors. By prioritising open communication and addressing stakeholder needs, SMEs can build a strong foundation of trust and support, which is essential for sustained success.

7. Recognise and Manage Risk

Establishing a robust risk management framework is crucial for SMEs. When done effectively, it can protect the business from unforeseen challenges and support growth. For example, an SME that proactively identified and addressed potential risks—such as market fluctuations and operational vulnerabilities—was better equipped to navigate disruptions and seize new opportunities. Their proactive approach enabled them to remain resilient and competitive, even during economic downturns.

In contrast, an SME that ignored risk management faced severe consequences. Without a clear framework, the business struggled when unexpected risks materialised, leading to significant financial losses and operational setbacks. This lack of preparedness hindered their ability to grow and adapt. By implementing and regularly updating a comprehensive risk management strategy, SMEs can safeguard their operations and enhance their ability to handle challenges and capitalise on opportunities.

8. Remunerate Fairly and Responsibly

Fair and responsible remuneration practices are essential for attracting and retaining top talent. When SMEs align their remuneration strategies with company values and long-term goals, they can create a motivated and engaged workforce. For instance, an SME that offered competitive salaries and performance-based bonuses saw higher employee satisfaction and lower turnover. This alignment with company values not only helped attract skilled individuals but also drove better performance and business success.

In contrast, an SME with poorly structured remuneration practices experienced high turnover and low morale. By failing to offer competitive compensation and neglecting performance incentives, the company struggled to retain key staff and maintain productivity. This misalignment resulted in disrupted operations, stunted growth and increased recruitment costs. Ensuring fair and responsible remuneration helps SMEs motivate employees, support long-term goals, and contribute to overall business success.

Implementing Corporate Governance in SMEs

Integrating corporate governance in SMEs can significantly drive growth, enhance transparency, and strengthen stakeholder trust. Begin by establishing clear governance structures, defining roles, and fostering a culture of ethics and transparency. Implement processes for accurate reporting, risk management, and ensure that remuneration practices align with company goals.

By adopting effective governance practices, SMEs can improve operational efficiency, navigate challenges, and build a strong foundation for long-term success and sustainable growth in a competitive environment.

For more detailed guidance, refer to the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations, 4th Edition February 2019.

Clare Connell

Practice Manager

Email Me Linkedin

How did you end up at Equil Advisory?
After I travelled to Europe and ran out of all the Money - I knew it was time to get back to work.

When did you start at Equil Advisory?
Around the time I ran out of money during my Europe trip.

What do you do at Equil Advisory?
I’m the Entertainment Warden.

What do you do when you aren’t at work?
Run, walk, chill, drink at THE BAAAAY live love laugh the BAAAAYY.

What is something not everybody knows about you?
Besides the Bay? Accounting is my second passion.

If you had to apply for a reality TV show what would it be?
Byron Baes.

What would your last meal be?
100% a juice cleanse.

Cats or dogs?
Zara.

Clare Connell

Practice Manager

Email Me Linkedin

How did you end up at Equil Advisory?
I originally started working here in 2020 as an Accountant but left to travel and take a break from Accounting. Now, a year later I’ve come back as the Practice Administrator.

When did you start at Equil Advisory?
January 2023.

What do you do at Equil Advisory?
Anything and everything to do with the office and making sure the team is happy and processes are working efficiently.

What do you do when you aren’t at work?
Catch up with friends, go on trips away, play tennis, go to the beach, shop!

What is something not everybody knows about you?
My childhood revolved around dancing and being in theatre plays and musicals.

If you had to apply for a reality TV show what would it be?
I have always wanted to be on The Block.

What would your last meal be?
Sushi.

Cats or dogs?
100% Dogs.

William Yates

Business Services Accountant

Email Me

How did you end up at Equil Advisory?
Equil Advisory came highly recommended, and when I was referred via a mutual friend, I jumped at the opportunity.

When did you start at Equil Advisory?
Started in July 2023.

What do you do at Equil Advisory?
The majority of my role here at Equil Advisory is dedicated to tax compliance and supporting clients through strategies and processes to help improve the business.

What do you do when you aren’t at work?
When I’m not at uni, you can usually find me out training or playing golf.

What is something not everybody knows about you?
I love a good bit of Lego in my downtime.

If you had to apply for a reality TV show what would it be?
Jonah from Tonga.

What would your last meal be?
Sushi.

Cats or dogs?
Dogs.

Alex Talia

Assistant Manager

Email Me Linkedin

How did you end up at Equil Advisory?
Having worked in the family business and doing the bookkeeping as a teenager, an accounting degree was the clear next step. My career initially took me to chartered accounting firms and then moving into commercial accounting for more exposure, I knew my move back into an accounting firm had to be the right fit. The supportive team and management at Equil was a clear choice for me.

When did you start at Equil Advisory?
June 2022.

What do you do at Equil Advisory?
A large part of my role is CFO focused, I aim to support our clients through the different stages of the business by implementing strategies and processes to guide them in making the right business decisions.

What do you do when you aren’t at work?
Watch sport and binge tv shows.

What is something not everybody knows about you?
I love fishing and hope to one day in the future be retired and do nothing but fish.

If you had to apply for a reality TV show what would it be?
Big Brother.

What would your last meal be?
A medium rare a5 wagyu tomahawk steak.

Cats or dogs?
Dogs.

Albert Tan

Business Services Accountant

Email Me Linkedin

How did you end up at Equil Advisory?
I was looking for a new place to clear my throat and break the office silence.

When did you start at Equil Advisory?
When I was assured that there would be another Malaysian member of the team.

What do you do at Equil Advisory?
Play hide-and-seek in the bathroom.

What do you do when you aren’t at work?
Go to the gym.

What is something not everybody knows about you?
I don’t know how to pronounce geography properly.

If you had to apply for a reality TV show what would it be?
Survivor.

What would your last meal be?
Macaroni and cheese with milk.

Cats or dogs?
Neither.

Albert Tan

Business Services Accountant

Email Me Linkedin

How did you end up at Equil Advisory?
I have always wanted to be an accountant due to the influence of my family as most of them are accountants. I joined Equil Advisory as it offered me a different opportunity to work on compared to other accounting firms as well as allowing me to develop different skills.

When did you start at Equil Advisory?
28th February 2022.

What do you do at Equil Advisory?
My role at Equil Advisory includes tax compliance work and assisting client in their day-to-day business with EA’s outsourced CFO function.

What do you do when you aren’t at work?
Spending time with my wife, talking to my family or reading light novels.

What is something not everybody knows about you?
Love spicy food even though I can’t handle it at all.

If you had to apply for a reality TV show what would it be?
Voice actor in any cartoon shows.

What would your last meal be?
Roti Telur Bwang.

Cats or dogs?
Love cats and dogs equally.

Sabrina Truong

Business Services Accountant

Email Me Linkedin

How did you end up at Equil Advisory?
I wanted to see how people who eat unhealthy actually live.

When did you start at Equil Advisory?
Just as the second lockdown was about to begin, so I didn’t have to talk to people in person.

What do you do at Equil Advisory?
Eat raw veggies and perfect my American accent.

What do you do when you aren’t at work?
Driving around Sydney for the best fast food places.

What is something not everybody knows about you?
I eat banana bread with chopsticks.

If you had to apply for a reality TV show what would it be?
Man vs Food.

What would your last meal be?
Deep fried chicken and chips with extra chicken salt.

Cats or dogs?
Cats!

Sabrina Truong

Business Services Accountant

Email Me Linkedin

How did you end up at Equil Advisory?
My dad is a bookkeeper, so it was natural for me to choose accounting as a degree. Accounting allows me to help others grow their businesses and achieve their goals, which is something I am passionate about. I joined Equil Advisory because it is not like your typical accounting firm. I also wanted to be part of a team that is supportive and provides the opportunity for me to develop and grow my skills.

When did you start at Equil Advisory?
July 2021.

What do you do at Equil Advisory?
A large part of my role is focused on tax compliance and the other part is dedicated to building client relationships so that I can better help our clients with EA’s outsourced CFO function.

What do you do when you aren’t at work?
You would find me watching Netflix, working out, or hanging out with friends/family.

What is something not everybody knows about you?
I am learning Korean.

If you had to apply for a reality TV show what would it be?
Super Trio Game Master.

What would your last meal be?
Pepperoni Pizza.

Cats or dogs?
Dogs!

Gaurav Shrestha

Senior Business Services Accountant

Email Me Linkedin

How did you end up at Equil Advisory?
Growing up I was exposed to the business environment, so I always wondered about the ins and outs of the business, how it runs and how to be financially sound. This piqued my interest on business studies and further after that into accounting. I wanted to broaden my horizons, knowledge and have a sound work life balance which led me to Equil Advisory.

When did you start at Equil Advisory?
17th December 2021.

What do you do at Equil Advisory?
At Equil Advisory, we are exposed a range of work that include tax compliance, bookkeeping, tax advice, liaising with the clients and outsourced CFO functions. My work is predominately occupied by tax compliance and outsourced CFO function.

What do you do when you aren’t at work?
I’m mostly out with my cousins or friends. Binge watching series or may be hop online to play some games.

What is something not everybody knows about you?
I can speak four different languages and I love gaming.

If you had to apply for a reality TV show what would it be?
The Voice.

What would your last meal be?
Mo Mo.

Cats or dogs?
Dogs.

June Wong

Business Services Senior

Email Me Linkedin

How did you end up at Equil Advisory?
My sister got tired of me working from home and hence decided to join EA.

When did you start at Equil Advisory?
Just as the first lockdown was lifted.

What do you do at Equil Advisory?
Eat Coco Pops and telling people what I am honestly thinking.

What do you do when you aren’t at work?
Planning my next EA Team workout session.

What is something not everybody knows about you?
I am scared to sleep alone.

If you had to apply for a reality TV show what would it be?
Survivor – because I wouldn’t last a day.

What would your last meal be?
I can’t decide between all the YUM-MEE animals of the world.

Cats or dogs?
Porcupine.

June Wong

Business Services Senior

Email Me Linkedin

How did you end up at Equil Advisory?
I realised that a lot of people that work in chartered firms are not the happiest. Thus, I was looking for a place where I am happy to go to work every day. I think I found it at Equil.

When did you start at Equil Advisory?
May 2021.

What do you do at Equil Advisory?
Connecting with clients and providing them with all the support they need so they can be at ease and have confidence that they are well looked after.

What do you do when you aren’t at work?
Watching dramas at home while lying on bed.

What is something not everybody knows about you?
I actually thought of becoming an IT person and did a couple of months of IT degree before realising that I am not tech-savvy at all.

If you had to apply for a reality TV show what would it be?
Amazing Race.

What would your last meal be?
Hotpot with lots of veges, mushrooms and tofu!

Cats or dogs?
Neither.

MAKS KHAN

Director

Email Me Linkedin

How did you end up at Equil Advisory?
Kapil and I were best buddies, so it was a no brainer to start here at EA.

When did you start at Equil Advisory?
Back in the day.

What do you do at Equil Advisory?
Loves to palm off work to Jennifer Harb.

What do you do when you aren’t at work?
Naps on the couch and my nightly sleep walks to bed.

What is something not everybody knows about you?
I love to boogie.

If you had to apply for a reality TV show what would it be?
The Amazing Race.

What would your last meal be?
Pork ribs with a side of bacon.

Cats or dogs?
Can’t choose, won’t choose, Nickelodeon’s CatDog.

MAKS KHAN

Director

Email Me Linkedin

How did you end up at Equil Advisory?
I loved maths and business subjects while in school and thought accounting would help me build on that passion. I joined Equil Advisory to be part of a team that allowed for a hands-on approach with regards to learning and looking after clients. Giving me the right building blocks to a successful career in accounting and business.

When did you start at Equil Advisory?
I have been with Equil Advisory since July 2017.

What do you do at Equil Advisory?
One of my core strengths is, I take my clients’ business personally. Trying to connect with clients and their needs is what helps us service them better whilst putting their minds at ease – whether it be through our Outsourced CFO function, Tax Compliance, Advice & Etc.

What do you do when you aren’t at work?
I love binging on Netflix, but other than that I love my football (soccer), even if it maybe just playing FIFA.

What is something not everybody knows about you?
I really used to be into painting, I could do it for hours. I have now replaced that with photography – I guess this is where all my creativity comes from.

If you had to apply for a reality TV show what would it be?
The Amazing Race.

What would your last meal be?
A decadent chicken parmigiana, with a side of chips and coke.

Cats or dogs?
Dogs.

JENNIFER HARB

Assistant Manager

Email Me Linkedin

How did you end up at Equil Advisory?
I have always been interested in business in general. During the first year of university, I didn’t have a path but as I took more of the core business classes, I came to realise that accounting is the common denominator in all business functions. You can’t tell how well a company is running without understanding the accounting side. Helping people solve their problems and achieve their business goals is a pretty rewarding feeling.

When did you start at Equil Advisory?
I started Equil Advisory in January 2019.

What do you do at Equil Advisory?
Clients want to feel like one that is valued, and timely communication is important to them. I am proactive in replying to emails and returning phone calls. I try to do my work in the most efficient manner, that is helpful to both my colleagues and our clients.

What do you do when you aren’t at work?
Hanging out with my friends, going to the gym and watching my shows.

What is something not everybody knows about you?
I once put electricity on my braces in year 8 thinking nothing would happen.

If you had to apply for a reality TV show what would it be?
I’m a celebrity, get me out of here.

What would your last meal be?
Lemon garlic chicken with a side of spicy chicken wings.

Cats or dogs?
Dogs, even though I have a cat.

CHIMENE GEAITANI

Senior Business Services Accountant

Email Me Linkedin

How did you end up at Equil Advisory?
Wanted to get away from Rob.

When did you start at Equil Advisory?
July 2018.

What do you do at Equil Advisory?
Efficiency.

What do you do when you aren’t at work?
Smoking shisha and thinking how to make my workflow more efficient.

What is something not everybody knows about you?
My feet actually touch the floor when i am seated.

If you had to apply for a reality TV show what would it be?
The Real Housewives of Western Sydney.

What would your last meal be?
Dumplings from the dodgy dumpling place, Maks and Rob love.

Cats or dogs?
Neither, they are not efficient.

CHIMENE GEAITANI

Senior Business Services Accountant

Email Me Linkedin

How did you end up at Equil Advisory?
The intricacy of business and numbers have always been of interest to me. Numbers are what we use to measure success with; they create clarity and commitment and, more importantly, create accountability. Accountability is the key to producing results - which is what I strive for here at Equil Advisory.Here at Equil Advisory, I am part of a energetic and committed team who strive for the best possible results for each and every one of our clients. I enjoy assisting numerous businesses in financial matters, as well monitored and controlled many of their day-to-day operations.

When did you start at Equil Advisory?
July 2018.

What do you do at Equil Advisory?
Working at Equil Advisory exposes us to a range of compliance work; from bookkeeping to financial reports, tax returns and advice. We are lucky to be trained in all scopes of work so that we’re able to satisfy our clients’ needs from start to end.

What do you do when you aren’t at work?
I enjoy my time at home with my little bub.

What is something not everybody knows about you?
I have an OCD on time.

If you had to apply for a reality TV show what would it be?
Big Brother.

What would your last meal be?
Pad Keo Mao from Home Thai.

Cats or dogs?
Neither.

KAPIL MAHASHETTYWAR

Managing Director

Email Me Linkedin

How did you end up at Equil Advisory?
Going to the pub wasn’t a legit career.

When did you start at Equil Advisory?
I got kicked out of too many pubs so I had to find my own space to drink so I started Equil Advisory in May 2017.

What do you do at Equil Advisory?
Get in the way.

What do you do when you aren’t at work?
Hide from my kids in my home office eating all the chocolate.

What is something not everybody knows about you?
I actually have a crown.

If you had to apply for a reality TV show what would it be?
Keeping up with the Kardashians.

What would your last meal be?
Salty Steak that I can send back to the kitchen.

Cats or dogs?
Cats (I am a massive Cat person).

KAPIL MAHASHETTYWAR

Managing Director

Email Me Linkedin

How did you end up at Equil Advisory?
I come from a family of businessmen, so it was only natural for myself to gravitate my career towards business. Accounting allowed me to build upon the necessary skills needed to be a successful a partner but also to assist me in starting my own business, Equil Advisory. Through my experiences in business I have learnt many things and now wish to assist my clients and team to reach their full potential.

When did you start at Equil Advisory?
May 2017, was one of the best decisions on my life to start Equil Advisory as it set the tone of implementing strategies from my past learnings. I wanted to ensure every staff member has enough empowerment and freedom to make their own decisions to run the practice in the right direction.

What do you do at Equil Advisory?
Everything! But love the personal relationships aspect of the job, I love to talk so it is easier for me to pick up the phone and have a chat with anyone.

What do you do when you aren’t at work?
Play with my sons, Memphis and Kiaan and entertain them. Lay on the couch and watch TV.

What is something not everybody knows about you?
I went to a hospitality college in manly and have a bachelors in Tourism and hotel management and I was born in India.

If you had to apply for a reality TV show what would it be?
So you think you can dance.

What would your last meal be?
Keerthi’s chicken curry.

Cats or dogs?
Dogs.