Corporate governance is not just for large listed companies. In an SME, a few well-implemented practices can transform decision quality and business sustainability.
When corporate governance is mentioned, many SME owners think of large listed corporations with audit committees and independent directors. “That’s not for my company.” An understandable but costly error.
The corporate concept — having structures that ensure good decisions, proper information flow, and appropriate oversight — is absolutely relevant for any company regardless of size.
At Blue Mountain, when we enter a portfolio company we implement four elements that can be put in place within weeks.
Not one that meets once a year to approve accounts, but one that meets monthly with a structured agenda, reviewing financial results, operational KPIs, and strategic projects. Three to five members is sufficient: the owner, the general manager, and one or two external directors with relevant business experience. The effect is immediate — accountability, early problem detection, and strategic debate.
A basic monthly report including: P&L compared to budget and prior year, abbreviated balance sheet focused on working capital and debt, actual and forecast cash flow, five to ten key operational KPIs, and commercial pipeline. A well-designed spreadsheet maintained rigorously is sufficient.
A document regulating the relationship between the family and the business. It need not be two hundred pages — a ten-page agreement covering core principles is enough. What matters is the conversation process that generates it and the commitment to respect it.
The first step towards proper governance is separating at least three functions: ownership, management, and supervision. In a small company, the same person may exercise all three, but they must be conscious of when they are acting in each role.
Better decisions, early problem detection, higher company valuation (a well-governed company is worth more to buyers), better family relationships (clear rules reduce conflict), and talent attraction (professional managers want to work in well-governed companies).
If I had to choose a single improvement action for a Spanish SME, it would be implementing a functional board of directors. It is the investment with the highest return per euro and per hour that I have encountered in my career.
Dirk Manuel Martens Jimenez Founder, Blue Mountain Capital
By Blue Mountain Capital
By Blue Mountain Capital
By Blue Mountain Capital
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