Businesses seeking additional capital with banks or investors can find themselves in a prolonged application process or even denied because the company lacks evidence of proper management. Failure to maintain regular meeting minutes and updated stock ledgers can demonstrate poor management and an unnecessary risk to financiers.
Goodwill is an intangible asset to the company that raises the value of the business. For example, selling business assets may result in $100,000; however, there is more to the business than just the assets. There are online reviews and public recognition. Goodwill could raise the value of the business significantly and is important during any business valuation. Failure to maintain proper corporate governance could create a negative perception in the community. This would cause goodwill to decrease, which thereby reduces the overall value of the business. Businesses don't want or need a reputation in the community for being poorly operated and managed.