Ethics
Nov 05
One of the challenges facing investors and entrepreneurs alike is the whole issue of what constitutes ethical behaviour. Some business courses attempt to teach morality and ethics but I am skeptical about the ability to teach ‘good behaviour’.
Many people (the vast majority I would say) believe that ethics and morality derives from ones religious belief. I reject this view entirely and am very suspicious of people for whom morality is something that can be referenced against a book.
As an entrepreneur, you will face multiple judgment calls and occasionally you will be required to make calls which will have an ethical dimension. You will have multiple stakeholders to consider. Primarily, these will be trading partners, employees, customers and investors. Your actions need to look after all of them.
In my humble opinion, each person has their own code of ethics that they need to subscribe to. My code is governed by a very simple overarching motive; ego. I admit that it is very important that to me what people who do business with me think of me. I would not want to behave in a way that would lead anyone to cast aspersions on my business morality.
My favourite adage is “treat others as you would wish to be treated”. As an entrepreneur, if you can treat your angels with that level of respect you will never go wrong. To illustrate, let me give you a real life example.
I invested in a business recently, which went bust. A new company purchased the business from the receiver and was aided in this process by the founding entrepreneur (who was the person I invested in). There is nothing wrong with this – it happens all the time. As part of the deal, the entrepreneur was given shares in the new company. What do you think the entrepreneur should have done with this stake?
In this case, he did nothing. In another identical scenario, the entrepreneur divided up the stake he obtained to give the investors who had lost their money some chance of getting some money back. Again, I will leave it to you to decide, what the right thing was and what the wrong thing to do was in the scenarios above. What I can say is that if the entrepreneur in the second scenario wanted me to back him in another venture, he would have my support with no qualifications. He has demonstrated that he will look after the investors who have backed him.
Of course, the example works the other way around as well. If you act as an angel in an ethical manner, the entrepreneur would recommend you as an ideal investor!
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