Do The Right Thing Smart entrepreneurs are doing well by doing good.

Because we believe the subject matter is so important,Entrepreneur Media is running the following article, examining thequestion of ethics for small business, in three of ourpublications: Entrepreneur, Business Start-Ups andEntrepreneur's HomeOffice.

Charlie Wilson is trying to run an ethical business. He'smade social responsibility part of the mission statement at his$1.6 million Houston-based salvage company, SeaRail InternationalInc. And he's made "self-actualization"--notwealth--his ultimate goal as an entrepreneur.

But don't mistake Wilson for some moralisticstick-in-the-mud. It's all about success. "Ethics iswhat's spearheading our growth," says Wilson. "Itcreates an element of trust, familiarity and predictability in thebusiness. We're in an industry where a lot of people cutcorners. I just don't think that's good for business. Youdon't get a good reputation doing things that way. Andeventually, customers don't want to do business withyou."

For years, ethics and business had a rocky marriage. Askentrepreneurs to talk about ethics, and the responses ranged fromscorn to ridicule. Here are folks who--by definition--like breakingthe rules. Suggesting that entrepreneurs should follow a predefinedset of edicts was about as popular as asking them to swear offelectricity.

But this may be changing. Whether people are hung over from thefreewheeling '80s or reflective about the coming millennium,talk about values, integrity and responsibility is not onlybecoming acceptable in the business community, it's almostrequired.

"This looks just like the quality movement of 20 yearsago," says Frank Walker, chairman of Indianapolis-based WalkerInformation Inc., a research and consulting company that trackscustomer satisfaction and business ethics. "Customers need away to differentiate one firm from another." For years, thedominant point of differentiation has been quality. Now, saysWalker, "Everyone can deliver quality, [ so businesses] needto step up to a higher plane."

Are the nation's entrepreneurs ready to ascend to newheights of ethical literacy and compliance? Well, sort of. Althoughmost entrepreneurs still aren't trying to unseat the likes ofSocrates and Plato, many are giving considerable thought toimproving their ethics, with hopes that doing good business will begood for business as well.

Gayle Sato Stodder covers entrepreneurship for variouspublications. She lives in Redondo Beach, California.

Why Bother?

What's behind the current buzz about ethics? A number offactors, really. The days when one could argue that conscience andbusiness don't mix are gone for good. Although the socialresponsibility movement of the late '80s and early '90shardly qualifies as news anymore--and, in fact, some of its iconshave hit tough sledding--its message has become part of our popularconsciousness: Businesses need not exist for the sake of greedalone. Consider the bar permanently raised.

As standards have gone up, public awareness has alsointensified. "It's not necessarily that we care more aboutethics today," says Laura Pincus Hartman, director of theInstitute for Business & Professional Ethics at DePaulUniversity in Chicago, "but that, because of [bettercommunication], we know more about companies than we once did.Anyone can log on to the Internet and find out instantaneouslyabout libel suits, harassment suits--all kinds of information thatwould have been difficult to uncover in the past."

Awareness translates into action. When Walker Information polled1,037 consumers in 1994, 47 percent said they'd be much morelikely to buy from a "good" company if quality, serviceand price were equal, and 70 percent of consumers would not buy--atany price--from a company that wasn't socially responsible."Apparently, you get some credit for being good,"observes Walker, "but you get clobbered for beingunethical."

For ethicist Robert C. Solomon, professor of philosophy andbusiness at the University of Texas at Austin and author ofIt's Good Business: Ethics & Free Enterprise for the NewMillennium (Rowman & Littlefield, $18.95, 800-462-6420),these threads weave together into a single truth: Ethics is thevery basis for successful commerce. "Ethical businesses tendto be more trusted and better treated, and to suffer lessresentment, inefficiency, litigation and governmentinterference," says Solomon. "Ethics is just goodbusiness."

Put a Moral In Your Story

Incorporating ethics into your business doesn't have to bepainful. Here are some steps to get you started:

Set priorities. The first--and perhaps simplest--thingyou can do to delineate your company's values is to create aclear mission statement. What's your highest priority?"Whenever we have to make a tough judgment, we refer to ourmission statement," Wilson says. "Putting things down onpaper helps set in stone what your standards are."

Start now to create company policies and procedures thatguide you. When you're just starting out, writing a policymanual may seem premature. In reality, now's the best time tostart crafting policies that will guide you as you grow.

Use procedures that help you with the kinds of dilemmas you faceeach day. In Iris Salsman's public relations business, SalsmanLund-gren Public Relations Inc. in St. Louis, credibility is key."We're asking the media to portray [clients] as certainkinds of people," Salsman says. "If they aren't thatkind of person, [the discrepancy] affects our reputation."Salsman performs careful client interviews and investigates onlineand with contacts to make sure the story a prospective client tellsis in line with the client's reputation. "We're notsaying we won't accept a client who's had problems in thepast," says Salsman, "but we don't want to be takenby surprise."

Get advice. Your industry's trade association mayhave a code of ethics that will help you establish your owncompany's policies and procedures.

When faced with an individual dilemma, Wilson consults fellowbusiness owners at the Greater Houston Partnership (similar to achamber of commerce). "Sometimes you don't know what'sbest," he says. "That's when it helps to turn to yourpeers."

Avoid hypocrisy. Suppose you have no compunction aboutlying to clients, you cook the books and--worst of all--you have nointerest in changing your evil ways. Go with that. But don'tpromote yourself to clients as a paragon of virtue. "Peopleare a lot more observant than you realize," says Wilson."You can't lie about being ethical."

The Rewards of Virtue

If tending to your company's moral fiber seems like a lot ofwork, consider the alternative. Imagine your company dogged bydisgruntled clients, hapless decision-making and a poorreputation.

Not your vision of success? It's hard to envision anycompany being successful under these conditions. And while it'strue that virtue offers its own spiritual rewards, the rewards ofrunning an ethical business usually include financial gain aswell--if for no other reason than that unscrupulous behaviorgenerally leads to havoc.

That's why business consultant and business owner DavidThrope, founder of Boston Knish Inc. in Acton, Massachusetts,believes "codifying one's ethics should be part of thestrategic planning of an organization early on." Clarifyingyour company's standards is a critical step towardentrepreneurial maturity. "A code of ethics gives [you] astructure within which to make decisions," says Thrope. Later,when you have employees, that code will help ensure everyone inyour company is on the same wavelength.

"I think about how I'm going to feel when I'm mymother's age--and my grandfather's age," says Wilson."What will I think of the decisions I've made? If Ican't feel [proud], what good is it to have made a lot ofmoney? It's in everyone's long-term interest to appreciatewhat they're doing, to feel good about what they'reaccomplishing. Otherwise, what's the point?"

Sticky Situation

By Laura Tiffany

Leaving your employer to start your own business can be one ofthe best--and most difficult--decisions of your life. But what ifyou call your former boss "Dad"?

"It's awkward to walk into a family dinner and say youwant to leave [the company], but I wanted my own business,"recalls Jay Tapper, 29, owner of Tapper Candies Inc. in Clevelandand former employee of Cap Toys Inc., the company his stepfather,John Osher, formerly owned and is now co-president of.

Tapper worked for Cap Toys for two and a half years as head ofits newly developed candy division. Leaving might not have been sosticky for Tapper if he hadn't chosen to go into the candybusiness himself. To soften the blow, Tapper gave nine months'notice and helped pick his successors.

The two companies aren't such fierce competitors as they mayseem at first glance. "[The interactive candy industry] is abig market. By focusing on innovation, we're not reallycompeting. [Cap Toys is] trying to maintain their market share, andwe're trying to pioneer a whole new category," Tappersays. Innovations from Tapper Candies include the Original GoodyBag, a plastic bag with toys, candy and activities, and the CandyCam, a toy videocamera that dispenses candy.

Tapper sees his leaving as an act that played fair to bothsides. "If I'd wanted to sabotage them and give them atwo-week notice, they would have been hurt in the short term and itwould have hurt my reputation. People who cut ethical corners--itcomes back to them in the end. I'm not advocating being apushover--you need to be tough and to negotiate your own deals--butethics and integrity and honesty are just as important."

The karmic theory of ethics Tapper follows seems to be panningout well for his company. In 1997, Tapper Candies brought in salesof $5 million, and Tapper expects to double that this year.

As for his family ties with his stepfather? It's become ahealthy, but not too sugary, competitive relationship: Tapperinvited Osher to be his best man when he got married last year, butthe two refused to be photographed together in an article in TheNew York Times in 1997, lest they promote each other'scompanies.

Contact Sources

Boston Knish Inc., (978) 264-0107, bosknish@earthlink.net

Salsman Lundgren Public Relations Inc., (314) 726-6111,fax: (314) 726-6511

SeaRail International Inc., (713) 223-0022, fax: (713)223-0729

Tapper Candies Inc., 15551 NEO Pkwy., Cleveland, OH44128, (888) GOODY-90

Walker Information Inc., (800) 231-4904, http://www.walkerinfo.com