Just because Governance sounds important it does not mean it is just for big companies. Even though governance is often talked about in terms of big business, as in the phrase "corporate governance", it deserves attention from every business owner.
I suppose there are really two faces of governance one needs to consider in a small business. Firstly there are the rules by which the company operates at the board level in terms of managing its internal affairs and decision making processes. Secondly the way it governs its external activities in terms of managing the interactions it has with stakeholders, suppliers, customers, partners and legislators - indeed anyone else with whom it may interact.
The inside piece is often the most neglected and the most problematic - especially if there is more than one director. For example, there should be a shareholder agreement that details rights and responsibilities - and what to do in the case of a dispute. There should also be clear definitions or responsibility and levels of authority - and clear lines of communication and reporting. All of this stuff is there to serve a purpose - all too often you only realise its importance when you need to call upon it, and its just not there.
The outside piece is just as important - especially in a world in which reputation can be damaged almost instantly. This is the down side of the Internet that the self-styled social media gurus do not necessarily tell you about - the speed with which things can go wrong. The company interacts with its environment in so many complex ways that some thought needs to given to the risks involved.
Governance is little more than risk analysis - spending some time every now and then trying to anticipate what could go wrong. Armed with the list the board needs to think about ways to assess the scale of each risk and the likelihood of it occurring. The final piece is put these risks into sequence of reducing loss or cost and work out how to eliminate or mitigate in each case - starting with the most significant.
Common sense? Absolutely!