In order to organize a realistic business plan and succeed in what you are doing, you need capital, a realistic business plan, and a solid product or a unique service. However, in the course of running a business, several issues might come up. They may challenge your integrity or your employees’ professional conduct in order to overcome obstacles. Most successful business owners will tell you that they didn’t get where they are by acting like “saints”.
It is a widely known fact that corporations sometimes violate rules. They do not comply with certain legislation and lie in their marketing ads to mislead customers.
Sometimes they get away with it for a while but then someone “blows the whistle” and they come crashing down by the magnitude of the revelations. Make no mistake; sooner or later the exposure will happen!
One can quickly imagine how important business ethics are for a business’s reputation, success, and well-being in the long run. In today’s hyper-connected world, business ethics are an issue that concerns small business owners like never before. Social media and online forums can become powerful tools in the hands of those who wish to report misconduct, illicit activities, and financial frauds.
In this article, we are going to explain business ethics and their importance for a small business. Ethics will stand next to any professional when making decisions or facing dilemmas.
What are business ethics?
In a business, problems that have to do with ethical principles often arise inside or outside the business’s environment. Depending on the aspect, the problems that affect business ethics fall into further categories. The commonest are social responsibility, deontology, and workplace ethics.
Ethical principles in business are a set of rules that every member of an organization must abide by and the business as a legal entity is obliged to follow.
It might sensible and easy to understand but, sometimes, ethical boundaries are a thin line to cross. Remember all those cases of racial discrimination that keep coming up on your news feed? Or, all those shady companies that happen to sell stocks at high prices just before the company declares bankruptcy? All these, are cases of unethical conduct and unfortunately, they are all too common.
What business ethic means is that every organization should provide equal opportunities to all. Companies must follow the laws of their industry and the constitution, and seek transparency in any internal or public dealing. Business ethics and social responsibility go hand in hand, no matter if your company’s size though!
Big names are often exposed in the media but even a small local business can affect its community in a case of unethical practices in various ways. This could damage your reputation irreparably and put you out of business indefinitely!
Business ethics are a big deal!
Every business owner has the obligation to read and apply the rules of ethics daily and make sure everyone under their employment does the same. There are no excuses and people who admit that weren’t aware of unethical practices are either extremely naive or complicit.
Unethical behavior usually starts small and in order to cover up a mistake, you or someone else made. However, you get trapped in a vicious circle. Ethical companies have to vigilantly defend their reputation by not tolerating behaviors that result in illegal actions.
This means that you should systematically check that all financial activities are legal. The accounting department should keep neat records and make sure your employees take business ethics seriously.
Customers prefer ethical companies
Research shows that businesses that exhibit strong ethical principles have increased profit margins. Consumers are more inclined to choose companies whose principles align with theirs!
When you, as a small business owner, feel confident in that you’re doing the right thing, it reflects on everything you do. Ethical behavior inspires trust both in your employers and the public.
This trust strengthens your brand even more and translates into sales; being ethically consistent pays off!
How to cultivate ethical principles in your small business
The best way to ensure that your company follows business ethics and that all your employees do the right thing consistently is to cultivate your corporate culture in that way. As we have previously mentioned in our article “How to cultivate a risk-taking culture inside your company”, corporate culture is an important aspect of your company’s success.
Therefore, when an ethical problem arises the best way to deal with it is to address it immediately and honestly. Every organization member must report any issues to their supervisor. This way, they will be able to figure out a solution without compromising its integrity and reputation.
After you spot the issue, consult with a legal advisor, if necessary, to correct any wrongdoings according to the legislation. When the problem is solved, try to understand the cause and explain business ethics to your staff. By doing this, they will know how to avoid this kind of situation in the future.
Sometimes, employees act unethically because they feel pressured to do so. For example, if all you care about are sales numbers, don’t be surprised when you discover an employee lies to customers about your product’s features and said customers sue your company.
To prevent ethical issues from occurring, train your employees on the subject and the possible dilemmas they might face. It might cost your business to do so but it will save you much more than you can imagine down the line.