Describing the complexity of corporate governance for start-ups, a truly diverse group, without relying on superficial checklists or recommendations, might be just as difficult as convincing a new-born start-up of the long-term benefits of a well-thought-through governance structure.
Luc Sterckx succeeded in both in his book “Corporate Governance for start-ups”, written in cooperation with GUBERNA.
What makes governance for start-ups so complex? Is governance in a large company with years of history not much more challenging?
Well, not exactly, according to Sterckx who has experience in both “types” of companies. The absolute impact of (negative) decisions made in a start-up might indeed be smaller, simply due to size. However, the fragility of start-up environments entails that each decision can potentially be much more lethal than in their larger, more mature counterparts. You cannot fall back on well-established procedures but must define those procedures yourself. Being a director in a start-up can therefore be synonymous to driving through the fog: you are not sure where you will exactly end up. This can be a challenge but also an opportunity. Boards in start-ups are for example in the exciting position to construe the culture and values of the organisation from scratch, together with the management.
The book offers some introductory reflections to guide start-ups through the fog and to let them capitalise on the advantages of their fluid, flexible structures. The essence of good governance remains, of course, the same: attention to the legal framework, good arrangements make good friends, strong control & reporting, a clear strategy…
Furthermore, special attention is paid to the relationship between the different governance actors, being the management, the board of directors and shareholders, as there is often a tendency in start-ups for overlap in their tasks and responsibilities. The author also touches multiple times upon the crucial role of the chairman. Finally, start-ups can also find concrete tips such as how to structure a board meeting and how to determine “the ideal” number of such meetings.
Make no mistake, this book is not only recommendable for directors in start-ups but for all directors in SME’s who want to reflect on the governance of their organisation, in a bite-size way. As Sterckx remarks poignantly:
from a specific Governance viewpoint it would sometimes appear as if even big companies are still in a start-up phase when it comes to professional Corporate Governance.
Governance is indeed in every fibre of its definition a never-ending process. Even though the SME might have an elaborate governance structure, there will always be some morning fog lingering in parts of its governance, waiting to clear up.