Why Being 'Good' Can Help You Build a Successful Startup
In starting up, you could completely fail. You can lose all of your money. You may upset friends and family. And you may need to start all over again once or twice. But if people trust you to tell the truth and keep promises, you will eventually be successful.
From a young age, other children know who the honest kids are and which kids lie, cheat or steal. One reason my brother and I succeeded so well as Kidpreneurs was because our friends knew we were always honest about what we had to sell and our prices were fair. As adults, the definition of ethical business practices may be broader, but we’re still drawn to the people who run their businesses the right way.
The real challenge to staying ethical -- especially when you're just starting up and get confronted with such dilemmas for the first time -- comes from the reality that you can potentially become more successful by setting your ethics aside. If you’re, say, bidding on a project and you have the chance to see another company’s bids, you will be more likely to figure out the best offer to get the job. Spreading rumors about another company’s internal problems can perhaps also help you build market share. But in the long run, this is bad business and can hurt you.
Of course being ethical is the right thing to do. But there are also some sound business reasons for taking the higher road with your startup. Here are five advantages of being the good guy:
1. You demonstrate trustworthiness. You want people to be confident that you will be fair with them. If your colleagues see you riding on the borderline of ethical behavior, they know that they cannot trust you to treat them any differently. At the very least, they will be wary of your offers or suggestions. This compromises your ability to do business.
2. You draw the best in the industry to you. Those of high ethics can recognize others who work to maintain standards and are more likely to want to work with you. This puts you in the strong position of having colleagues that you can trust.
3. People will admire you. This includes those with questionable ethics. They might try to take advantage of you -- and probably will -- but they will still recognize your value.
4. Your ethical employees will be happy to be part of your company. Ethical people like to work in a fair environment. They are also better employees because they are working for you not just for themselves. Your demonstration of ethical behavior will reinforce expectations and reduce the chances of having internal problems.
5. You will receive recommendations and referrals. When ethical people see the way you do business, they will generally pass the word to others in the industry. You may find yourself gaining customers -- good customers -- because of your high standards.
How have you dealt with an ethics problem at your business? Let us know in the comments section below.
Matthew Toren is a serial entrepreneur, mentor, investor and co-founder of YoungEntrepreneur.com. He is co-author, with his brother Adam, of Kidpreneurs and Small Business, BIG Vision: Lessons on How to Dominate Your Market from Self-Made Entrepreneurs Who Did it Right (Wiley). He's based in Vancouver, B.C.