The Canberra Business Podcast
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The Canberra Business Podcast
Small Business Governance- Why Structure Matters from Day One
Governance—a word that makes many small business owners recoil. But what if I told you it's not about bureaucratic red tape or corporate boardrooms, but simply about creating clarity in how you run your business?
In this enlightening conversation with Stephanie Bates, Operations Manager for KPMG Enterprise Advisory and a Director of the Canberra Business Chamber, we unpack what governance actually means for small businesses. Stephanie demystifies this often-intimidating concept, explaining that governance is essentially about "setting some guidelines around how you want your staff to interact, having a few policies and some basic how-tos in place." Far from being a burden, these structures create the foundation for sustainable growth.
We explore when to start implementing governance measures (hint: earlier than you think), how to approach position descriptions in a constantly-evolving small business environment, and practical approaches to financial oversight that match your risk appetite. Stephanie shares valuable insights on communication strategies that ensure your team understands expectations, from morning stand-ups to email acknowledgments. We also discuss the complex web of legislative requirements small businesses face—from varying payroll tax thresholds to workers' compensation rules—and how to navigate them effectively.
Perhaps most compelling is our discussion about ethics and trust as the bedrock of small business success. As Stephanie aptly puts it, "If you're transacting with people in the economy, you are building trust... and the ethical foundation then becomes trust." For small businesses especially, where the owner's reputation is directly tied to their offering, ethical governance isn't just nice-to-have—it's essential. Whether you're just starting out or looking to strengthen your existing business structure, this conversation offers practical, achievable approaches to governance that will help your business thrive without drowning in paperwork.
This episode is supported by CareSuper.
Hello and welcome to the Canberra Business Podcast. I'm Greg Harford from the Canberra Business Chamber and I'm joined today by Stephanie Bates, who's the Operations Manager for KPMG Enterprise Advisory, the Director of the Canberra Business Chamber and formerly the Head of Corporate Services for CharterTech Steph. Welcome to the podcast.
Speaker 2:Thank you, so pleased to be here.
Speaker 1:Now you're really passionate about small business and especially small business governance, which sounds a bit scary for many people. But tell me, for small business, what does governance mean?
Speaker 2:Yeah, absolutely. Look, governance is one of those big words where people kind of shy away and go, oh no, small business doesn't really apply to me. But in my view, business governance especially for SMEs or small business is really just setting some guidelines around how you want your staff to interact, having a few policies and some basic how-tos in place so that you can guide your staff around how it is that you want them to behave in your organisation.
Speaker 1:So yeah, so in a small business that's not having a board that looks after the business, it's just about having policies, procedures and processes in place to make sure everyone's doing what they need to do.
Speaker 2:Yes, absolutely so. Definitely doesn't have to have a board, but certainly, for example, if you have a finance delegation policy in place. So as a business owner, as a CEO of a small business, you can stipulate to your staff how it is that you want them to transact with your vendors and at what point they need to involve you, for instance, as an example. So at what?
Speaker 1:point. Do you think small businesses need to be thinking about processes around governance, Because often a business will start with a single person or a couple of people. They get together, they form a business, they get going At some point. They're not the only ones in the business. When's the right time to be starting to think about that?
Speaker 2:Look, I would say from the beginning, to be honest, I would encourage anyone in a small business to think a little bit ahead for three to five years and I know that sounds a little bit daunting but certainly laying the foundation of how you want your staff to behave, whether there are HR policies that you require, whether you want to set up regular meetings with your directors on how you want to discuss the business. I think that's really important to do from the very beginning. But certainly, if you have a vision to grow your business, start as early as you can.
Speaker 1:It sounds like a lot of process, though. How do you get started with this if you're literally just starting out?
Speaker 2:Yeah, look, I think that there's just some key things to consider. So, for example, a really good place to start is there's lots of good resources available, and I would point people to the AICD website. They have some really good guidance around small business governance. But probably what I would say to anyone in small business is have a look at the Canberra Business Chamber website as a really good starting place. There's a lot of resources that you and your team have collated over the years and certainly available on the website. So an example of something that you might want to consider looking at at the Canberra business website is position role descriptions for your team. So why is that important? Well, it's important to give your staff the understanding of what it is you expect them in their role. It's important for when they have performance discussions and also it's just important for them to validate what it is they're doing within your business day to day.
Speaker 1:Do you think there's a gap there? Do lots of small businesses not have job descriptions organised?
Speaker 2:I mean I can't speak for all businesses, but certainly the ones that I can see and have been involved in. I think position descriptions are probably something that are a bit of an afterthought in my opinion, and I think it helps to have that established, because it sets clear boundaries on what it is that you know person A is doing versus what person B is doing, and that's important to really have a consolidated view on the business and go forward as a team.
Speaker 1:Now in small business, though, those job descriptions at least at a practical level are going to evolve quite quickly over time. If you've only got two or three employees in your business, you don't necessarily have the luxury of being able to stick with your job description. How often do you need to come back and review those?
Speaker 2:That's a really good question. I would say come back and review them on an annual basis. So if you have a performance cycle that goes on an annual basis, certainly have a look at what your position descriptions look like. And yes, I think probably for a very small business of two to three, five staff, it's difficult to have position descriptions that have really just narrowing down on what that person is doing. And often what you find is business owners do a lot to support the business A to Z. But what you're ultimately trying to facilitate is my example earlier, the financial delegations, for example. Do you want two people to sign the bank to release payments, for instance? That will evolve over time as your business grows. You might want to set that up, you may not. It just really depends.
Speaker 1:So let's talk a little bit about financial oversight and, I guess, risk assessment. What do you think small businesses need to be doing in that space? How do they decide whether they should have one or two signatures on the bank account?
Speaker 2:I think it comes back down to the owners of the business assessing what their risk appetite is. So it's not always practical to have two people to say and wholeheartedly agree it's really just good governance. From a good governance perspective, you would have one to load a transaction and one one to release the transaction. But it doesn't mean that you have to have that in place. So it's really just as a business owner does it make sense to have that in place? If it doesn't make sense, then do what makes sense for you, but have a process and communicate that with staff. I guess it's the ultimate message is are your staff aware of what your expectation is around your risk appetite and around your financial delegations and how it is that you want them to transact? If they understand and if it's documented, I think that's sufficient. It doesn't have to be a formal policy, but certainly, certainly it has to be communicated.
Speaker 1:But how do you communicate that if you're not writing it down? I mean, surely best practice is actually to have a written policy that you can point to?
Speaker 2:Yeah, absolutely. Best practice is always to have it in a written document while staff read it wholeheartedly. That's always the question, but certainly you can point back to it. I would probably say set regular meetings, set an agenda. Set a fortnightly meeting, a monthly meeting with your staff If you're the director or the business owner. Set aside a weekly discussion with your business partner or with your finance people just to understand the position of the business. Make sure you set that time in diary, because if it's not in the diary it won't happen. So it's really just what medium is best to communicate with your staff. If your direction is by email, then pop it in an email. If you don't want a formal policy and such.
Speaker 1:And in terms of getting people to pay attention to the things that are said or the policy, whether it's written down or not, you make a good point that not everyone reads everything. Have you sort of seen tips and tricks over the years to help get messages out around governance, out to frontline staff, for example?
Speaker 2:Yeah, I, um, I guess it depends on your industry.
Speaker 2:I think, um, what I've seen work really well is, um, some sort of a morning stand-up, for instance. It doesn't work in every industry, but certainly if you're working on a project that you're delivering, you might have a think about having a weekly or a daily stand-up just to communicate some of those really high levellevel things that you want to draw out to do with the project. But you could also use it as a forum to raise any changes in policy or anything that you want them to do differently. That doesn't have to be daily, it doesn't have to be weekly, it could just be a monthly thing. And if you wanted to do an email, an email would work too. I would always encourage anything that you want to formalise within your business, certainly to have in writing. And what I've seen work very well as well and this is probably not so much in a small, small business, but bigger business is have some sort of acknowledgement from staff to say, yes, I've read that and I accept that. That's what I'll be adhering to.
Speaker 1:And that becomes an issue as you bring new people into your business over time as well. Right, because it's all very well briefing the team that you've got in place now, but in six months' time, when your business has grown and you've brought another four people into the books, there's a whole bunch of new people that need to be across the same conversations yeah, absolutely.
Speaker 2:And look, I think that larger businesses obviously have this in place very well where they do onboarding training, where you would wrap all of new staff into what your key policies are. A small business probably doesn't so well, but it's. It's a matter of then getting your team on board to ensure that whoever comes on board is is well advised and educated around what the key policies and and desires of the business owner are in terms of handover and all of that sort of thing now, if you're running a small business, if you're a director of a small business, you obviously take on a number of responsibilities to shareholders and you've got some statutory responsibilities and obligations as well.
Speaker 1:Do you think directors in small businesses really understand those?
Speaker 2:I'm not sure that directors are fully across all of the legislative requirements, and I would really encourage people who are establishing business for the first time to really get a sense and understanding of what impacts their particular business. So, for example, what do I mean by that? Um, things to be aware of is when do payroll tax obligations kick in? For example, um are you liable for any particular statutory reporting within your industry? Do you have to report for workplace gender equality Generally in small business? You probably don't, but it's good to have an understanding of, if you don't, why you don't and at what point does thresholds kick in? So I think another good example is casual employment. Conversion, for instance, is legislated under the National Employment Standards. It's not applicable to convert casual staff after 12 months in an entity that has less than 15 staff. But if you're on that threshold, it's important to understand that you are on the cusp and the consequences of having casuals employed in your organisation.
Speaker 1:As an example, and some of these obligations vary from state to state and territory to territory right. So the rules that apply here in the ACT are not necessarily the same as those that apply across the border or up in Queensland.
Speaker 2:Yeah, absolutely Certainly. Payroll tax, for example, the thresholds are different in each state. So if you're in a small business entity and you are sort of on the cusp of moving into a different state, I would encourage small business owners to leverage some of the resources on the Canberra Business Chamber website, for instance, or seek additional support from external sources, just to make sure that we've ticked all the boxes, because obviously legislative requirements are a little bit different to just internal policies. You have to adhere to those, and I guess the purpose of small business governance is really to manage your legislative requirements and also your risks. So, as long as you have everything that you do in your business with those two lenses in mind, that's probably a key.
Speaker 1:So what are the big things that we need to be thinking about from a small business point of view? You've got taxation the ATO is the source of truth there but you've got payroll tax. You've got workers' compensation and health and safety issues. What are the other things that small businesses should be thinking about?
Speaker 2:So I think really one of the things that we need to think about here are, yes, the payroll tax thresholds as they come in your BAS workings and and your reporting obligations. What I've found in my personal experience is the treatment of things like depreciation. So, depending on the industry that you're in, it really changes as your revenue profile changes. So those are some of the key considerations. If you're transacting with defence, you might have thresholds that apply for different member registrations that you have to consider, such as DISP. Workplace gender equality kicks in at 100 headcount, so that's probably not so applicable for a small business entity. Modern slavery is a hot topic at the moment. I think that's something that people have to report against, but that's something that kicks in at a million revenue. So, again, some of the things that apply to larger businesses, but certainly for small business, the payroll tax components I think are critical. Your BAS and your ATO obligations, workers' compensation, as you mentioned, those are certainly the keys.
Speaker 1:Yeah, so that gets pretty confusing right. All these different thresholds and different definitions and I know the Chamber and the broader Chamber network have been campaigning for years for a bit more standardisation across some of these. Do you think small businesses get confused about the different rules that apply?
Speaker 2:Yeah, I think absolutely. It certainly is confusing because if you're looking at just even workers' compensation, that range changes how it's applied, different thresholds. Some states will lump all of your actual turnover and all of your actual salary costs to calculate your premium, whereas others will exclude it. So it's extremely difficult to navigate as a small business, I think.
Speaker 1:What about ethics? You know most of the small business, in fact, all the small business people I talk to are keen to do the right thing. Broadly, how important do you think it is that people are embracing an ethical approach to small business?
Speaker 2:Well, as a chartered accountant, I would say it's critical to your business, but I would say that, as a chartered accountant, I would say it's critical to your business, but I would say that as a ca.
Speaker 2:So look, I think ethics is one of those things is, if you're transacting with people in the economy, you are building trust, and trust is the ultimate foundation for anything that you do, and the ethical foundation then becomes trust. So, to build your business, if you don't have the trust and you're not working in an ethical way, then absolutely you have to come back to that groundwork of having your internal governance, of teaching your team how you want them to interact with your clients, how you want them to interact with your suppliers and all of that sort of thing.
Speaker 2:So I think it's absolutely critical, especially for small business, where your name as a director is linked directly to the services or the products that you provide. So I guess if you take it back to that level, it's ultimately your name, not your business name, that you're selling as a small business, and I think that's critical to really take that lens for ethics especially.
Speaker 1:In moving from perhaps an ethical approach to one that's a bit more leading edge corporate social responsibility. Again, most business people I talk to want to do the right thing for the planet and for their people and everything else. Do you see that as being really important for small business to embrace?
Speaker 2:I think it's important to embrace that. But I also think from an internal governance perspective it's probably less critical, I would say, for small business, because small business would generally transact in an ethical and in a sustainable way. Now I'm generalising because I understand there's always outliers, but certainly the emphasis on that topic particularly is on the big players and I think it filters down to small business. But it probably is not as critical as it needs to be, certainly not from a governance perspective, because you don't have any reporting obligations in that sense.
Speaker 1:Do you think customers are looking for more of an ethical and social responsibility approach from small business, though?
Speaker 2:Yes, I do think that's certainly the case. So how would you tie those two together? That's a difficult topic, isn't it so?
Speaker 1:And it's always a challenge, right, because consumers want the world, but often aren't necessarily ready to pay for it.
Speaker 2:Yeah, that's right and I guess it goes back to like from a small business governance perspective it goes back to your risk appetite is are you wanting to display that you're ethical or that you're sustainable? Is that something of the key messaging that you want to send to your customers? If that's important to your client base and you know that's important to your client base weave that into your customers. If that's important to your client base and you know that's important to your client base weave that into your policies. Weave that into how you want your staff to message your firm, and I guess that's what ultimately, it comes back down to governance of policies and how you want your staff to interact to really show your end client that this is what you stand for as a business.
Speaker 1:Now there's a number of small businesses here in Canberra who transact regularly with the federal, government or government agencies and often they're required to demonstrate their corporate social responsibility and environmental practices as part of a tender process or making a sale into government. I hear grumbles sometimes about the compliance associated with that and how complicated and cumbersome it can be to pull paperwork together. Is that something that you've experienced?
Speaker 2:Yes. So absolutely Pulling together RFQs responses for government can be a significant overhead, so certainly in people people in this town would be well familiar with how to respond to those. In my experience in terms of those corporate responsibilities, certainly charter tech was a small business or a smaller business entity. I didn't find that we had to dwell on that topic so much we had to cover it off, but certainly it wasn't a key component. It was more about around workplace gender equality reporting and whether we were compliant with that, and sometimes we had to weave in our policies around certain topics. So it was important just to make sure that that was all up to date as well. So indigenous procurement was one of those topics that came up regularly. So yes, it's certainly cumbersome to respond to some of those. Should it put small business off? No, I think there are certainly a lot of resources out there on websites such as the Canberra Business Chamber, but also holistically in business in Canberra, where you can find information to support those responses.
Speaker 1:And some of that does point perhaps to a need to document some of your processes up front. Do you think that's a fair observation?
Speaker 2:Yeah, absolutely. Look, I'm firmly of the opinion that if you set the groundwork at the beginning, if you know you want to transact with federal government, these are some of the things that you want to consider at the beginning, because if you do tick over that threshold or you do come across a question which you need to answer, you have at the ready a response, and I'm sure a lot of your listeners will be aware that some of those responses to government have a tight turnaround. So the last thing you want to be doing is pulling together baseline governance policies and documents to support tender responses. That's not best practice. I wouldn't advise it absolutely now, steph.
Speaker 1:Small business obviously is not for the faint-hearted. There's a lot of responsibility that comes with running a business. You've got to generate a return for your shareholders yourself in many cases. You've got to look after your people. You've got to look after your customers. Have you got any final sort of governance-related advice that you'd like to offer our listeners?
Speaker 2:Certainly I think it's the main thing is set clear goals for what you want to achieve. I think it's really important to ensure that your team are all pushing for the same goal, and the best way that you can do that is to communicate that effectively to your team through various policies, through various role descriptions, through you know what your risk appetite is, how you want to transact with your clients and all of that sort of thing. So it's really important to make sure that, as a business owner whether you do it in a formalised paper-based suite of policies and processes and procedures, or whether you do that by regular emails or team catch-ups it's just really important to communicate what it is that you're effectively pushing for as a business owner.
Speaker 1:Some good advice there, Stephanie Bates from KPMG Enterprise Advisory. Thank you so much for joining me here on the Canberra Business Podcast today.
Speaker 2:Thank you so much for having me.
Speaker 1:It's been great having you on, steph, and don't forget that you can check out future and past editions of the Canberra Business Podcast by following us on your favourite podcast platform. This podcast has been brought to you by the Canberra Business Chamber with the support of Care Super, an industry super fund with competitive fees and returns, exceptional service and a focus on real care. We'll catch you next time on the Canberra Business Podcast. Thank you, bye, bye.