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Are Paid Referrals Worth the Cost?

This story appears in the March 2015 issue of Entrepreneur. Subscribe »

Q: I’ve been approached by people who want me to pay them to introduce big-name clients to my business, and by others who want to advise my business in exchange for a percentage of the company. Are these arrangements ethical?

Andy Martin

A: It sounds like you have opportunists at your gate—but that doesn’t mean you should dismiss them all straightaway. Reduce the likelihood of walking onto shaky ethical ground by making decisions based on transparency, integrity and accountability. Take time to think through the benefits, drawbacks, implications and potential for unintended consequences in paying money for client referrals or handing over a percentage of your firm as payment for advice. Due diligence on potential business partners or suppliers should always include assessing whether they are likely to be an asset in your efforts to build your company’s reputation and trust with stakeholders. 

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