Corporate Governance and Startups by Prateek N Kumar

It was the autumn of 80s, I

can still remember the day,

sky was clear with hues of

blue and gold, the

possibilities of summer

was gone, and winter chill

was looming on the

horizon. My mother had

dressed me and my

brothers in white kurta and

pajamas’ that day and one

of father’s colleagues had

taken us to office that day-

it was 15th of August, our

Independence day.

My father hoisted the Tricolour and all his colleagues had gathered around the ground and boxes of

Snacks were being distributed and one member of his staff brought us the same. My father rebuked him

and asked us to return the boxes, and after the ceremony was over he took me to a shop and bought me

some sweets. Being a kid I felt very bad at the time and the incident of the day remained itched in

memory forever. With time I saw him not allowing us in his official vehicle or to utilize any other official

resources. This was my firsthand experience of corporate governance.

So, what is corporate governance? A set of rules, practices and processes by which an organization is

directed and governed. Corporate governance involves balancing the interests of the many stakeholders

in an organization including its shareholders, management, employees, customers, suppliers, financiers,

government and the community at large.

At an age when the competition for human and financial resources is global, and time-to-market is

reducing with the connected world, the need for honesty and integrity is ever more important, these

practices and transparency instill confidence among current and prospective stakeholders, enabling

organizations to command higher valuations, reduce perceived risks, minimize the cost of operation,

and pave the way to profitability and success but what is even more enduring is the respect that it

governs from the community it serves.

As an entrepreneur who has conceived the greatest, most transformative and game-changing idea the

world has known and filled with boundless energy and enthusiasm, focused on product development,

funding, and chasing the bottom-line, the last thing we want to think about is corporate governance.

Rest assured that potential investors, employees and other stakeholders will seek out and reward your

well-managed company, which will ultimately position you for future growth and respect. Consider both

the strategic and operational reasons for adopting good governance practices during the early phases of

your company’s development. It would be highly detrimental for any startup to dismiss the importance

of good governance practices and not incorporate them early on to ensure long-term success. Good

governance practices if implemented early-on will allow you the freedom to innovate within the

framework of accountability and yield strong dividends for years to come.

As an entrepreneur it is difficult for us to admit that we do not know everything and we do not have all

the answers. Worse, we don’t know what we don’t know. This is where a Board of Directors becomes

invaluable they share real responsibility for organization’s actions and resultant outcome and provides a

level of accountability and transparency critically important to potential investors and partners. A

quality board shows that our ideas are given due diligence and endorsed by someone other than

ourselves, validating our vision and creating value for the stakeholders.

Board members are much like a sports team; the responsibility for winning is distributed and shared: a

team to share the risks and rewards. Developing and then articulating company’s decision-making

process limits the liability of top management and create an environment of transparency, trust and

respect.

As fellow entrepreneurs we all know that it’s lonely at the top, but if we think of society, our team,

customers and our vendor partners first we will create an army of people ready to own a part of our

dream and ultimately make it a reality. My journey and belief in corporate governance have taught me a

few things as an entrepreneur which I would want to share with my fellow entrepreneurs and anyone

thinking of bootstrapping

It’s not WHO you know but WHAT you know and WHERE and HOW you can make a difference – The first

Client who empanelled us as vendor are yet to do business with us while there are few Clients who

trusted us and brought us more clients by WOM.

Think BIG, Set hairy, audacious, BIG goals but be humble.

A motivated team is better than 10 so called experienced experts – Motivate your team to go beyond

what they are capable of and give them the credit when they deliver.

Follow the law of the land and pay your taxes on time.

Do not hire a family member, It helps in being transparent.

Always give that little extra to every stake holder, You may not have lot of money but will have earned

trust and respect.

Believe in yourself it’s only then that the world will start believing you.

Be Frugal- It’s not about the flashy car but about that extra penny saved to get more resources for the

organization.

Follow the rules that exist for everyone in the team and enjoy your free time.

Before my startup journey began one day I was sitting with my core team and planning strategies of

corporate governance and I told my wife, “You are more qualified, more experienced and are better

suited for this company that we are about to form but only one of us can work here.” She had worked

really hard and was at the forefront of our first few pitches, I am sure she must have felt sad but without

batting her eyelids she said, “It’s your dream just ensure in this journey of making it a reality you should

always think about yourself the last and always subordinate what is good for everyone than what is

good for you.”

Another autumn has arrived, great people around have taught me great lessons on corporate

governance……Its lonely at the top…..Or loo around is it?

Prateek N Kumar

The author is the founder of NeoNiche Integrated Solutions, a marketing solutions company.