How Ethical Business Tactics Can Improve Profitability

James Webster, Executive Chairman, ROK Financial.

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Returning a profit is a goal for every business owner, but the question is to what extent are you willing to bend in order to turn a profit? Believe it or not, there are some companies that focus solely on profits and tend to overlook ethical implications. While overlooking ethical concepts may have short-term benefits, it can ultimately hurt your brand in the long run.

Defining Ethical Business Practices

In business, ethics refer to making decisions that the average person will support and view as socially acceptable. Such points include offering a good work environment for employees, having a high-quality and valuable product and taking into consideration customer and social safety.

Ethical business practices involve making decisions and having your business act in a way people will view as morally acceptable. While it’s true that morals vary between individuals, in most situations it’s clear to see where the moral line stands, and it’s up to you as a business owner whether or not to cross that line.

Some businesses see a conflict between ethics and profit, so they may focus more on profit. While an unethical decision can sometimes lead to increased profits, it can also damage the company’s reputation in the long term. If customers view your business as morally wrong, they might become unwilling to patronize you, thus cratering profits in the longer term.

Focusing On Your Ethics

You may sometimes ask, “What is more important in business: ethics or profit?” You’ll naturally want to focus on ethics as you work on your business since doing so can help you establish a strong business over one that concentrates strictly on money.

Focusing on your ethics will require you to remember some crucial points throughout the process:

• Putting your customers first.

• Keeping your employees comfortable and safe.

• Minimizing potential dangers.

Specific actions can lead to earnings while ignoring ethics, but those actions will usually catch up to you and lead to consequences. Those consequences could cause you to lose money long-term.

Is Being Ethical Good For Profits In The Long Run?

The short answer is, yes. Sticking with ethical behavior can ultimately provide longevity for your business. There will be times in your business when you consider or are approached with shortcuts to increase profits, demand, etc. But you must stop and think about how this will affect the brand in the future. I believe it is so important to stick with an honest and moral approach to all aspects of your business. Some benefits of being ethical include:

• Building customer trust.

• Retaining customers.

• Improving employee behavior.

• Avoiding drama and backlash.

• Maintaining good brand recognition.

• Increasing your positive reviews.

• Helping with negotiations.

Let’s dive into these in more detail. First, you’ll increase trust with your customers. If they know they can trust you, they become more willing to work with your business and make more purchases. You’ll also likely retain more customers, and they’ll make purchases in the future, boosting your profits in the long run.

You’ll also notice this relationship between ethics and profits as you see how the process improves employee behavior. As employees understand your ethical approach and feel safe, they often become more willing to work with your business and do their best, further boosting your profits.

You’ll also avoid drama and backlash if you focus on ethics. You impact your brand recognition whenever you do something unethical and people turn away from your business. That causes you to lose money in the long run despite any initial profit gains.

If you still ask, “How can business ethics improve profitability?” you should recognize that doing so typically brings good reviews. The more good reviews you obtain, the more customers you stand to gain, allowing you to secure more leads and profits.

Finally, good ethics can help you during negotiations since businesses and customers will know they can trust you. That way, you can secure better deals to help everyone.

How To Improve Ethical Standards In Your Business

Consider these approaches to running an ethically minded business.

Listen to your employees.

Working on your ethics also involves listening to employees to find out their opinions. Employees pick up on details managers and others don’t, so asking them for their thoughts can help you identify unethical practices or similar issues.

Try to have your managers interview your employees regularly to collect more information. You can also hold surveys to gather more details and find out where your business needs to improve in making it more ethical and better for everyone involved.

Always prioritize quality.

You’ll naturally look into growth vs. quality; always prioritize quality. Quality helps your business to establish itself as a strong contender among your competition. Customers who know you’ll offer great products will turn to you for their consumer needs.

As you focus on your quality, everything else will fall into place with your business. You can advertise high-quality products, drawing attention to your business, so you make money.

Make a decision when profits and ethics collide.

You’ll also have to consider your options when profits and ethics collide. For example, you may have a business opportunity that leads to more profits, but your customers and employees may view it as unethical.

While the gains may seem appealing at first, you should prioritize ethics. Doing so can help you keep the respect of your customers, so you’ll retain more of them. You’re likely to sacrifice sales later if you choose profits over ethics.

Understanding how ethical business tactics can improve profitability can help you make decisions. Instead of just focusing on profit, you’ll think about the ethics involved with your decisions, leading to the best choice overall.

Even when gains seem to benefit your business, you’ll get more out of the process if you focus on ethics. Do your best to review your business, identifying how you can make it more ethical and make money by retaining your customers.

The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.

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