Good corporate governance is essential for survival of any business. We have setup the following governance framework to streamline how our small manufacturing business is run.
We have setup an advisory board for the business which is made up of four people (the Chairman, CEO, Company Secretary and one non-executive member). The advisory board is responsible for defining the long term vision and strategy of the company. It also holds the executive accountable for execution of the agreed strategy. The board meets monthly to deliberate on company matters. The board is led by the Chairman. The Company Secretary assists with legal matters as well. The CEO submits a written report to the board on a monthly basis.
We have separated the executive function from the board. The executive is led by the CEO and includes the Finance Director, Head of Production and Head of Sales, and is responsible for day-to-day operations. The Administrator serves as secretary to the executive. The executive meets on a weekly basis to coordinate operations, production, sales, HR matters, etc. Weekly operations reports are prepared by the Head of Sales, Head of Production and Administrator. These reports are deliberated on every Saturday.
We have setup an improvised accounting and reporting system. The system relies on Google Sheets and Waveapps and enables real time tracking of sales, costs, cash, production, quality records, attendance, etc. The monthly financial and performance reports are easily extracted from this system. The system is maintained by the Administrator who also serves as the Accountant. All executive members have viewer rights to the reports.
We have set up some financial controls as well. Roles have been segregated. Key expenses are approved by both the CEO and Finance Director. Monthly budget requisitions are submitted by the Heads of Departments. Daily cash and sales reconciliations are done. Excess cash is regularly banked. Regular stock counts are done for both raw materials and finished goods. The Operations Supervisor is in charge of all company stock. Monthly reconciliations of cash, sales and inventory are done.
We have also set up a monthly training for the executive and other supervisors to deliberately build capacity. This platform is an opportunity to reflect on the business and make some changes. It is also an opportunity to grow the team.
So this is what we are doing in our small business to improve our governance. What systems and controls have you put in place in your business? Leave a comment below.