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Ethics for Small and Micro Business

Updated on October 25, 2017
Nancy Owens profile image

Nancy has been a licensed business owner and freelancer since 2010.

Micro Business Success

Components of a successful business model.
Components of a successful business model. | Source

Being an Ethical Business Owner

Most entrepreneurs enter into business operations with visions of serving their customers with a smile and the expectation that their customers or clients will hand over their hard-earned dollars with a smile as well. This vision manifests as reality for a day or two, and then the waters become murky. A customer complains, returns a product, or even Yelps!

An employee begins to mutter to other employees about work expectations. A client expects you to redo, or expand on the service for free. You are selected as the winning bid on a job only to find that the client expects favors in return.

What do you do?

Money and Ethics

Money is the root of many an ethical dilemma.
Money is the root of many an ethical dilemma. | Source

How the Sarbanes-Oxley Act Affects Your Bottom Line

The Sarbanes-Oxley Act was originally developed to rein in corporate operations that were becoming a swamp of inequity. After the act was made law, corporations found they must comply in areas of transparency to stake holders, as well as other crucial areas of operations.

In the years since its implementation, consumers have grown to expect, and even demand a higher degree of ethics not only in their dealings with the corporate world, but in dealings with small and micro businesses as well.

Choosing to do what is right may not be the easiest course of action, but you will never be sorry you did.

— Nancy Owens

How Small Business Owners Meet Demand for Ethical Operations

Small business owners are stepping up their game. If you want to succeed you must realize that ethical operating practices are a must. How can you and your micro business, or small business meet the demand?

  • Encourage integrity among your employees. Reward workers for doing the right thing as opposed to doing the easy thing.
  • Honesty. Be honest with your clients. If you are in a business, such as the construction field, be honest with clients in your bid process. Do tell clients about any limitations you may have. Be honest about the number of hours estimated to complete the work. Many handyman services as well as contractors, will grossly overstate the complexity of the job because they know that most people are at a complete loss in terms of understanding the nature of the work to be done. One woman reports that a handy man quoted her $400.00 to fix a wind-damaged roof on a small shed. She bought all materials needed. It took the contractor only 51 minutes from the time he pulled into her drive until the time he departed. He made 400 dollars for less than an hour of work. She felt ripped off and taken advantage of. His workmanship was good, but so what? Do handymen really need to make $400.00 an hour?
  • Be on time. If you schedule an appointment, be there. This should go without saying, but many small business owners are very bad at this. Realize that when a potential customer, or even an existing client schedules an appointment, they are either taking time off work and losing income to do that, or they are taking time away from some other important activity. Do what you say you will do, and show up when you say you will.
  • Accountability counts. Some operators think that by denying or lying about their failures, they are “handling” the situation. If this is you, you should know that most people see right through that. Even if they don’t tell you to your face, they know when they are being lied to, and will lose respect for you and your company. Again, construction contractors are famous for doing this. You may not notice it right away, but word will get around in your community, and your business, sooner or later, will suffer the consequences.
  • Do not be afraid to discipline a faulty employee. Many small and micro business owners fear dealing with an employee who has a bad attitude, is frequently absent or late for work, or who otherwise does not do the work they were hired to perform. In today’s world, bad employees frequently know more about how to manipulate the employer than the employer knows about how to discipline wayward employees. If this is you, know that by letting a bad employee off the hook, you are placing undo stress and strain on your good employees. This can cause a very high turn-over among good people. If you need help in figuring out what to do with a bad employee, contact your state’s Labor and Industries office for ideas about how to handle the situation.
  • Clearly state policies. Your clients have a right to know about your shipping, return, and quality policies, before they make a purchase.
  • Ask for feedback regularly. It is easy to ask for feedback when you know a customer is happy. But it is crucial to ask for feedback when you sense a customer is dissatisfied in some way. This is the only way you can improve. When a customer is unhappy, you may be able to keep the customer and turn them from sad to happy just by being willing to listen, improve, and follow through.
  • Do the right thing for the situation and for the customer. One customer reported that a construction company took out her windows and broke them just to find out the replacement windows they brought did not fit. They actually left the customer with no windows in the house for three nights because “it would sure be easier for us if we could just bring some boards on Monday because it is getting late.” The customer reports saying that he wanted the boards that night, but did not want to have to pay extra for them going to get them. The contractor said they would have to charge extra for doing that, and the customer was left living in a home with no windows for the next three nights. It is the opinion of this writer that no matter the inconvenience to me, I will do the right thing. If I had been the contractor in question, I would have automatically went and got boards to keep my client secure. There would not have been an extra charge, because it would have been my fault. I don’t mean to pick on contractors here, but this type of cheating is rampant in the industry. If you are a contractor, know that sooner or later you will make a mistake. When that happens, own it. You will not lose business. You will gain respect. And this applies to every industry.

The Entrepreneurial Spirit

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Develop Your Ethics Plan

Develop your ethics plan by writing out your purpose, vision, and goals. Plan now for how you will deal with situations that could be ethical dilemmas, and write down some policy for dealing with those issues. Focus on conducting business honestly, and it will lessen your need to protect yourself later on. Do not let someone tell you that you have to cross the line in order to succeed or make a profit. If there is no profit in a business venture, your pre-investment research will show that. If you do find that you have an unscrupulous customer, or lawsuit seeker, make full use of your resources through your state’s Labor and Industries department. There is a lot of free help if you spend a little time on that site.

References

Labor and Industries: www.lni.(your state).gov

https://www.law360.com/articles/254483/examining-the-purpose-of-sarbanes-oxley

https://www.hiveage.com/blog/ethics-and-successful-small-business/

© 2017 Nancy Owens

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