Muhammad Talha Kazi | Secretariat Division
The Small, Medium and Micro Enterprise (SMME) Sector is widely regarded as the building block of the South African economy. By virtue of their impact on wealth & job creation, small businesses are known to have a significant impact on the economy and are increasingly understood to be fundamental in poverty reduction and unemployment.


Given the widespread impact of the Covid-19 pandemic on our broad economy, small businesses are facing unprecedented challenges and uncertainty. It is therefore imperative that such entities take cognisance of their application of good governance principles in this time of crisis.

While good governance practices has historically been attributed to larger, public organizations; small business owners can adopt similar, appropriate mechanisms which, in the long run could bring about improved business practices thus leading to increased market share and better financial performance. 

For a small business owner, implementing a suitable governance structure may be as simple as having on board a trusted, experienced advisor and some form of administrative support. This may be further elevated to appointing a few non-executive Directors, or an advisory board that can assist with the strategic direction of the business. 

Regardless of the size of the business, implementing good governance principles has a number of benefits which includes the following: 

  1. 1. Promotes effective decision-making 

Given the increase of new trends and opportunities emerging, having robust policies and procedures in place helps with effective decision making in one’s business which can assist with strategy and driving the business forward.

  1. 2. Builds a strong reputation and legitimacy with stakeholders

A business can only be successful based on the reputation and trust that it holds with its key stakeholder groups. Recognizing the efforts taken by a business to implement good governance principles in the form of ethical conduct and transparency in dealings will foster stronger relationships with customers and service providers. 

  1. 3. Helps manage risk

Adopting good governance practices ensures that the business is not solely focused on financial performance but ensures that adequate processes are in place to comply with any necessary statutory reports and reporting obligations. In this regard, having an experienced, trusted advisor on hand will help ensure accountability and attention to these key components of business.

  1. 4. Promotes an ethical conscience as a responsible corporate citizen

Depending on the nature of the business conducted, it is vitally important for business owners to be mindful of their obligations as a responsible corporate citizen on issues such as environmental matters, wastage of resources and occupational health and safety.