Developing a Governance Mindset: The Building Blocks for Entrepreneurial Success

Entrepreneurs are unique actors in the private sector; they drive innovation and create new jobs and boost economic growth. Their high growth and risk tolerant mindset, coupled with finite resources, mean they face a unique set of integrity and ethics challenges. While larger companies will have accountants, attorneys, and procurement teams, entrepreneurs often develop policies as they grow. This is why ethics and integrity are the building block for entrepreneurial growth and development.

Entrepreneurs are not “too small" for Integrity

Oftentimes, entrepreneurs assume they are "too small," but this perspective creates blind spots. Entrepreneurs work with third-party vendors and operate in high-risk environments; risks exist in informal and fast-paced settings. Small mistakes can escalate quickly. It can be hard to distinguish the entrepreneur from the business and vice versa; here are examples where the lines are blurred:

• Gifts or bribes? When a founder is the face of a business, small tokens of appreciation can be perceived as a bribe without clear guidelines for gift giving. 

• Policy Grey Areas: changes in regulation can expose entrepreneurs vulnerable to corrupt actors seeking to take advantage of policy gaps.

• From Family to Favoritism: a growing business can quickly expand; informal hiring processes leave entrepreneurs vulnerable to legal and reputational.

Integrity matters for the entrepreneur. Neglecting governance creates both legal and reputational risk. The founder is the business, and the company is the founder. This means that a founder who is seen as unethical may struggle to access capital, build partnerships, and attract new business. Collectively, entrepreneurs could be viewed negatively as banks and regulators treat small businesses and startups with increased scrutiny; this stymies the growth and innovation at the heart of entrepreneurship.

Develop a Governance Mindset

Compliance is not a luxury that can be savored later. It is about developing a set of attitudes and cultivating a governance mindset. Entrepreneurs do not need a compliance officer or lawyer to ask the right questions:

• What is the most significant risk to my business?

• How will a decision impact my business? What are the high-impact mistakes?

• Can I collaborate with my team to ensure I have good guidance for essential issues?

Governance for the entrepreneur requires an attitude focused on asking questions and building on lessons learned. Entrepreneurs can start building a culture of integrity before growth accelerates. Perfection is not required. But creating the habits of questioning, documenting, and cross-functional collaboration will lead to long-term success.

Michele Crymes

Anti-Corruption and Governance Expert