Managing an e-commerce business means operating at a fast pace in a competitive industry. Retail e-commerce sales in the US passed the $1 trillion mark over the course of 2022. As your company aims to flex to the whims of your customer base, better ways to market your e-commerce business, and advances in how to effectively source, sell, and distribute your wares, there’s another concern to pay attention to: corporate governance guidelines. While this aspect of running a business is not always top of mind and won’t have an effect on today’s sales, making a mistake in this regard could put a stop to the pace your company is experiencing. By following governance guidelines, your company and leadership can establish workable processes and procedures and then focus on what you do best—running the business.
What Are Governance Guidelines?
Corporate governance guidelines usually center around the board of directors and the expectations of how they will operate, such as the structure of the board, the criteria for joining the board, and how long each director will serve.
Another way to look at governance guidelines is around the tone and controls a company sets, to ensure that integrity is built into its finances. After the corporate scandals of the early 2000s, publicly traded companies are required to firm up their corporate governance structure and their internal controls over financial reporting, as they are subject to the Sarbanes-Oxley Act. These expectations have trickled down to private companies that plan to eventually make an initial public offering, although this may be a slower process as they have other priorities. It may be up to the board of directors to scrutinize and suggest improvements to policies and procedures that ensure financial integrity becomes or is a constant part of the company.
Corporate Governance Guidelines: Best Practices
Some best practices for corporate governance guidelines include:
- Ensuring that the company has a competent board.
- Encouraging a culture of integrity.
- Having a strong internal audit function.
- Being transparent with employees and stakeholders.
- Complying with the rules and regulations the company is subject to, on a local and federal level.
For the last (but important) bullet, an effective way to ensure compliance is to turn to outside experts who can offer an objective and informed view on whether the company is doing what it should be doing—and that it is doing so efficiently. The rules that accompanied Sarbanes-Oxley (namely Section 404) were notoriously known for bogging down companies at first, but experts in the field have helped companies streamline their Sarbanes-Oxley compliance while also helping privately held companies prepare for the new compliance requirements that publicly traded companies must follow.
Following a Corporate Governance Guide
Ultimately, any company’s internal corporate governance guide, if they have one, will follow industry best practices, but it should be customizable to how your company operates. Do employees know what’s expected of them? Does the company encourage employees—and top executives—to act and operate with integrity? Are financial processes, procedures, and systems set up in such a way that the company’s financial information can be relied upon?
As an e-commerce company grows and expands, these questions should continue to be answered as policies will need to be regularly reviewed to ensure they are still relevant to what the business has become. Is it time to assess whether your company is operating efficiently while still being compliant with current regulations? The RoseRyan team can help.