This is a question that must have plagued every entrepreneur at some point or the other in the course of business. Carrying out ethical business practices is at the core of any business. And more so for small businesses – high principles and moral standards are the differentiators that keep them afloat in the hyper-competitive world.
For a start-up facing frequent financial upheavals, it’s all too easy to compromise principles to clinch that much-needed deal or to cut corners by providing inferior quality products/services or by delaying payment to vendors and employees.
Here are a few benefits enjoyed by businesses that take their ethical values seriously:
In times of seeking bank loans, inviting venture capitalists or borrowing funds from other financial institutions, a business with high integrity and moral values will command a greater success rate. Keep in mind that banks, venture capital firms, and other financial institutions would want to check up on your business code of conduct to satisfy themselves if your business will do right by the customers, employees, and investors.
Morale Boost for the Employees:
When employees see that you stick to your convictions and principles in difficult times too, they too will follow suit. In a transparent and honest work culture, you will find employees that are honest, who don’t steal and cheat your customers. When you pay them fairly and treat them well, they will reward you by being faithful, trustworthy and sticking to the firm resulting in low turnover.
In research conducted by the Institute of Business Ethics, it was found out ethical behavior in business pays off in financial returns. When customers, vendors, and community realize your ethical work practices, they are more likely to want to do business with you. If you treat your customers fairly, pay the suppliers on-time and embrace social responsibility for the community, they will stick to you which says a lot in the loyalty-scarce economic world.
If you treat your customers and employees fairly and respectfully, they are bound to notice it. When you take care of their issues and listen to them, they too will respect you in return which is invaluable for long term success and growth.
Start-ups should realize that though it’s easy to dupe people to earn a few extra bucks at what cost? Word-of-mouth spreads more quickly and rampantly in the small business world. Remember, reputation and goodwill take years to build but can be lost in no time if ethics are not maintained. Hence, if you are in for the long haul, stick to your moral standards and business ethics.
Henry Kravis, the co-founder of the American private equity firm Kohlberg Kravis Roberts, known as KKR, summed it up “If you build that foundation, both the moral and the ethical foundation, as well as the business foundation and the experience foundation, then the building won’t crumble.”