Corporate governance
In one sentenceThe rules that set how the business is run and overseen: who decides, who approves, who holds whom accountable, and how the rights of owners and stakeholders are protected.
Simply put
Governance separates ownership from management: the owners set the direction and oversee, and management carries out and reports regularly.
In a small business it starts with simple steps: written authorities, separating the owner's personal accounts from the business's accounts, and regular financial statements reviewed by the owners.
Example
A family company with three partners wrote rules stating that any payment above a set amount needs the approval of two partners, and that the statements are presented to the partners every three months.