Lisaveta Ramotar Explains Why Creating And Following Corporate Governance Policies Helps Startups Last Long-Term
In the world of startups, it’s easy for the lines between ownership and leadership to become blurred – especially when some members of the team fall into both categories. Many startups don’t even think about corporate governance until they begin to reach outside of the founding members to look for investors – but finance expert Lisaveta Ramotar says that’s a mistake.
Lisaveta Ramotar says that if a company is looking to grow, getting good corporate governance policies in place early is key. This can help the company get off to a smooth start, and can determine how problems will be handled before they arise. Having good corporate governance policy can help early investors see that the startup is legitimate and that making an investment is a smart move, according to Lisaveta Ramotar.
In today’s tough economic times, crises are more likely to arise than ever. According to Lisaveta Ramotar, having solid corporate governance policies in place proves to potential investors that the company knows how to manage the changes that today’s economic climate may bring. Building trust between founders and investors plays a key role in the growth of startups, and corporate governance must reflect this.
Lisaveta Ramotar also recommends developing corporate governance policies that are particular to your startup. While some companies pull from best practice corporate governance policies, this doesn’t take into consideration the unique issues your business may face. According to Lisaveta Ramotar, when you put in the time to develop corporate governance policies specific to your company, you’re showing investors that you’ve thought through how your company will handle situations in the future.
Corporate governance policies for small startups are often different from those of large public companies, according to Lisaveta Ramotar. This is due to the fact that many startups have founders who double as investors, while this is rare in large public companies. Small startups typically have broader goals than well-established companies, and their corporate governance policies need to reflect how they’ll manage rapid growth.
Many startups – such as Uber and SoFi – experienced fast growth for which they were not prepared, resulting in illegal and/ or bad behavior due to being ill-prepared for their success. Lisaveta Ramotar recommends that startups plan their corporate governance policies with both standard and unprecedented success in mind. It can be hard to predict how a startup will grow, and it’s important to be prepared for whatever lies in the future.