Starting a Business the Right Way

Keyword/s: business loans, small business grants [used in the article] 

If you think that the success of a business depends on how much it has earned, think again. No matter how abundant the harvest is, if the core and pulp are rotten then the fruit of sweet success can never be tasted. The core and pulp of a business reflect the social and ethical foundations of it. Your plan towards success should not only be strategic, but also considerate and grounded in order to protect your resources, manpower, and clients. 

Ethics: Establishing Good Business Reputation 

A competitor can cripple the financial success of a business, but it takes more than that to kill the great name that the business has established. Leaders in the corporate world believe in creating a good reputation for a lasting legacy. 

For instance, the competition among large enterprises is not only based on providing cost-efficient products for consumers but also on providing various benefits for their employees. It would be easier for a business not to offer health benefits in order to reduce operational costs. However, doing so discourages the loyalty of employees, resulting in a decrease of productivity. Hence, it will affect the quality of service produced in the long run. 

Costco exemplified an unorthodox but undeniably successful business strategy, with regards to keeping its clients and securing the welfare of its employees. Jim Sinegal, CEO and founder of Costco, made sure that the welfare of his employees tops his priorities in his company’s business plan. In fact, he wears a name tag that reads “Jim” similar to his employees to blend well with them. His work philosophy is to create a genuine and mutual respect among his employees by starting with calling each other on a first-name basis. 

Unlike most CEOs, you can reach Sinegal without getting through millions of operators. He has always believed that the best way to please their clients and keep their employees is to obey the law, which basically means following the Code of Ethics. Indeed, in 2006, Costco already has 462 stores in 37 states and eight countries, raking in a total sales of more than $52 billion and still growing. 

Five Myths on Business Ethics 

To get you on the right track, Linda Trevino and Michael Brown enumerated five business ethics myths that you should dispel in your strategy and philosophy. Remember, ignorance to what is wrong versus what is right already defeats the purpose of business ethics. 

Myth #1. Business ethics is easy. 

Not because one thing is right, it means it is the ethical thing to do. Making ethical decisions is still based on the values and principles dictated as a moral standard, which may vary from one culture to another. Furthermore, ethical dilemmas are not quite easy to identify in an actual situation. 

To help you get through the complexities of business ethics, Trevino and Brown recommended a multi-stage process for ethical decision making—moral awareness or the recognition of the moral dilemma, moral judgment on a specific course of action, moral motivation to commit to that moral action, and moral character to sustain the moral action despite future challenges. 

Myth #2. Eliminating unethical persons improves overall ethical behavior. 

Pruning a few weeds provides a remedy. But without taking out the root, the problem will persist. Most ethical violations are not only by choice of a particular person—it is primarily influenced by a common practice they are exposed to, and that has never been eradicated. 

So instead of finding a person to blame, try to create an atmosphere at work that does not tolerate flawed behavior. Establish a strict implementation of rules that bypasses no one in spite of status or political affiliation. And best of all, make your employees understand the significance of following the rules rather than inflicting fear. 

Myth #3. Ethics is best kept through formal training. 

Formal training is the best way to teach about ethics, but it is not the only way to learn it. Without consistent and actual practice, ethics can never be imbibed in the working environment. Trevino and Brown suggested that people tend to be in a better behavior if executives, corporate leaders, and supervisors emphasize the “ethics walk” over the “ethics talk.” 

Myth 4. Ethical leadership is based solely on individual attributes of a leader. 

Trevino and Brown recommended that in order to create “moral persons” out of your employees, the business needs to be led by a “moral manager.” 

“Moral managers” are responsible for setting proper expectations to the people and holding them accountable for their actions. These moral managers should exemplify ethical conduct as well, while in the process of morally converting its subordinates. They should be able to integrate respect, discipline, and integrity in every decision they make, whether it’s for the business or for society in general. A good leader should not just be either of the two; he or she should be both in various ways. 

Myth #5. A person’s ethics diminishes through time. 

What people commonly misconstrue is that once business ethics becomes a hot topic, sooner or later, it will diminish like any other fad. Actually, unethical fluctuations are just normal, and it is not based on any trend or “social cravings.” 

Accepting that unethical behavior is normal does not mean one should tolerate it. It actually poses a challenge to leaders that they should come up with strategies on how to uphold moral standards for all time. This can be done through simple habits rather than extensive programs. 

Impact of Business Ethics on Various Facets 

What you sow shall reflect on what you will reap in the end. So for start-up businesses, it is integral to sow ethical conduct as early as its conception, so that organizational development settles in. Here are some suggestions on how important business ethics is on every facet of a business. 

a. Operations 

Start-ups should determine ethical dilemmas both at the onset of establishing business as well as during daily operations. To do this, assess the fairness in the distribution of stock ownership, labor, and tasks. Furthermore, test the quality of products and services rendered. Also, be professionally transparent when it comes to failed deals, company conflicts, and constructive criticisms. 

For those who wish to avail small business grants, study your business first and establish a feasible business plan. Remember, grants are still based on funding, and that other people may need small business grants more than you do. As much as possible, assess what you need first so that you won’t have to ask for too much. 

b. Employee Relations 

Being ethical to your employees starts by making their welfare one of your priorities. Small-time startups should allot a generous budget for their workers’ health benefits and goals development. Establish a professional reward system for high performance and ethical conducts. Practice ethical conduct as a leader and make your employees follow you by example. 

c. Customer Relations 

Aside from the efforts of upholding quality products and services, ethical conduct can improve customer relations by looking for opportunities on how the business can be socially active. More than a mere marketing strategy, social and community service employs both teamwork and the application of a vision in working for a brighter future—for the company and for the society in general. 

d. Competitors 

Competition cannot be avoided in the corporate world. To ease the tension, the least you can do is to treat your competitors fairly. Acknowledge their successes and work on your own improvements. Furthermore, create original ideas for your business. 

With the intention of “being ahead,” some businesses resort to abusive and illegal business loans like usury or predatory lending. Resorting to such actions is also an ethical violation. To avoid this, transact with reliable, reputable, and reasonable business loan companies in case of financial shortages. Do not be misled by temporary advantages in predatory business loans or the instant lending from usury, as these will lead you to overlook increasing rates in the future. 

Generally, ethics encourages you to make decisions with the end in mind. Your ethical decisions will lead you to the path of success, as you allow a strong reputation for integrity and honesty speak for your business. 

Ethical decisions provide your clients an assurance that they can trust you to do your job well. It also gives them a guarantee that they can achieve equal treatment, despite their economic status, political/social affiliations, sex, and race. A business should follow a standard Code of Conduct, so that any transaction operates on one consistent principle. The Code of Conduct also helps a business to keep its focus. 

Furthermore, ethical conduct also teaches your clients the proper way that they should act. Abuse can be prevented, since your clients are aware that unethical conduct will never be tolerated. They can use this good practice in other business transactions. In this way, you have not only served them based on their expectations, but you went above and beyond by leaving a legacy. 

About the Author: Elston Marcelo is a Marketing Consultant for Debtconsolidation.com.au, a debt consolidation and agreement company that provides assistance and advice for bad credit loans and bankruptcy issues for people and their finances. Follow him at twitter @SamariaKurt