Business Ethics and Consumers
In our twenty-first century economy, consumers are becoming gradually more socially active and cognizant of ethical business practices. Ever since Irishman Charles Boycott was ostracized in the late 1800s for unethical management practices as a landowner (hence the word, “boycott”), customers have progressively increased their willingness to punish unethical institutions by taking their dollars elsewhere. Accordingly, boycotts and protests against large companies are commonplace among today’s news headlines—but what about small businesses? Do customers really care about how ethics of the shops on Main Street?
What are Small Business Ethics?
The old adage from the Spiderman franchise certainly holds true when it comes to business— “with great power comes great responsibility.” Huge, multinational companies dominate the economy with their billion-dollar fortunes and are thereby held to a high level of liability for their actions. Their every move is scrutinized, and there are constantly whistleblowing reports of unethical business practices (like Volkswagen and its emissions scandal, the Samsung corruption case, etc.). On the contrary, your business (with comparatively little power and thus comparatively little responsibility) seemingly flies under the radar in the ethics department. After all, odds are you can’t break an ethical code by rigging elections, borrowing state secrets or singlehandedly pollute a country’s air.
But small business are held to an ethical code, nonetheless. It is simply an ethical code of a different color. Small businesses can act ethically through their participation in local, community events and charities. They can hire a diverse staff and do all that they can to be ecofriendly. Small business owners can ensure that their products are cultivated or produced in an ethical manner. And, most importantly, small businesses need to make sure that they are transparent and courteous with their clientele. Many small businesses hold appeal because people like doing business with their neighbors and friends in lieu of faceless franchises.
There certainly is an “ethics code” for small business. But how much do the ethics effect the consumer?
Do Small Business Ethics Matter?
So the big question is: do customers really care about small business ethics?
A survey conducted by reporters for the Wall Street Journal suggests that yes, ethics do matter. Their research suggests that consumers willing to pay a marginally higher price for goods that are ethically produced than unethically produced. In fact, if a product was known to be produced unethically, consumers would only purchase the product if it was offered at a significant discount. Other surveys indicate that as many as 84% of consumers say that they are willing to make personal sacrifices in order to purchase a socially and environmentally ethical brand.
So, to answer the question—yes, though some dispute the degree to which ethical small business practices influence consumers, most studies will affirm that customers do indeed take ethics into consideration. Small business ethics matter. Keeping a respectful and diverse staff, volunteering and participating within the community and ensuring that you and your products/services are friendly to the environment can help you bring in a bigger payday as a small business owner.
Are your top-tier ethical standards not giving you a big enough payday, though? Are you finding yourself short of the cash flow that you need to expand your company? Factor Finders can help solve that problem. We can get you hooked up with invoice factoring for small businesses so that you have debt-free working capital within days. Visit us online and talk with one of our factoring experts.