Ethics In Business

Ethics are very important to all business people. Yet, many neglect ethics as an important concept that has a major impact upon a person's success as an entrepreneur and investor.

Consider something as simple as sales. Many would-be entrepreneurs actually hate the sales process, which is a serious disadvantage, given that generating sales is a company's most important activity.

In Flying Solo: How To Start An Individual Practitioner Consulting Business, Stuart Walesh says new consultants often associate negative connotations with marketing. No doubt this comes from associating marketing and sales with pushy sales people who want to make a sale whether or not the sale is really in the customer's best interest.

Walesh writes: "To the extent you learn to view marketing as earning trust and meeting client needs... you may conclude that not only is it an ethical process, but also a very satisfying and mutually beneficial one."

Walesh divides consultant marketing into three parts--Ethos, Pathos, and Logos. Ethos means trust. Pathos means empathy and understanding. Logos means logic.

To be successful in sales and marketing, Walesh emphasizes that you need the three in order. First, potential clients must trust you and your reputation. Lacking this, they won't hire you or your company for a job. Secondly, to adequately fulfill the client's needs, you must listen to the client and learn what those needs are. Thirdly, and, finally, you must implement a logical and reasonable solution for the client, even if that means recommending another consultant or company.

Walesh says too many new consultants try to start at the end. They focus upon the 'logical' solution for a client before the client trusts them and before the client has had a chance to express the client's goals, desires, and problems.

The same sequence is also important in investing in smaller companies. If a potential investor doesn't trust the people running the company, any sophistication of the business plan or proprietary technology means little. Entrepreneurs seeking money must gain the trust of potential investors, and potential investors must evaluate the personal credibility of entrepreneurs seeking their money.

Company insiders will always be closer to a company's checkbook than investors and company insiders can always find ways to enrich themselves at the shareholders' expense. Monitoring sales and expenses and having an adequate accounting system help, but, by no means, makes oversight flawless.

Consider the recent and widely-publicized bankruptcy of Enron. While employees were prevented from selling their shares and investors were fed flawed accounting, high-ranking members of the management team found clever, and not so clever, ways to enrich themselves as the company sank.