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7 ethical tips for small businesses to become more successful (Efficient and Effective)

People who own small businesses often find themselves so busy keeping the business running and trying their best to expand at the same time that they can easily lose sight of their priorities and end up getting further away from their goals.

Following certain ethics can make your job much easier in making decisions that will protect you from the unnecessary risks and help you achieve your goals faster.

Here are 7 ethical tips that small business owner may find useful.

1. When making deals, always be thinking of a win-win for both sides. In my experience, every successful businessperson is always thinking about the other party involved in the negotiation.

For example, when buying you should never negotiate a really low price for the work needed, because at the end of the day, we receive what we pay for. Likewise, when selling you should avoid reducing the prices too low. Most complaints come from those clients who never wanted to pay the true value for your services.

2. Meet your liabilities ASAP, don’t let it build up.

Bills should be paid as soon as possible.  Small businesses rely on their suppliers and employees. You will want to continue to have a good working relationship with everyone.  If a supplier does offer credit, it may be possible for the small business owner to offer to pay earlier and receive a discount for doing so.

More often than not, small business find themselves struggling because the bills pile up for suppliers, they dip into VAT collected and they couldn’t save the cash for Corp tax liability.

The cash-flow issues can easily bring down a business. Until the business is well established it’s good ethics to avoid both giving and taking credit. It takes a while to get better at managing the credits flowing in and out of your business. It will be a distraction from your core business if you get into the mess quite early into your business. So as a principle try to deal without credit. If possible don’t offer credit to clients and don’t take credit from suppliers. Sooner or later a client will fail to pay and you’ll regret doing business with them on credit.

It can be a difficult approach to take but remember every failed business failed to meet all their liabilities.

3. Always be compliant. Running a business will require complying with regulatory authorities and ignorance is not an acceptable excuse. Every business will have to comply with HMRC and companies house as well as other industry related regulatory authorities. Don’t leave it for later, as before you know it, fines, penalties and inspections will be taking over your days at work.

There are two types of people in the business world, one that don’t care about law & rules and others who are very cautious to be on the right side of the law. Nobody likes a driver who continuously breaks the traffic rules. Make sure you are not running the business like such drivers.

4. Always be helpful. You can build a good reputation and even save on marketing & advertising by just being helpful to anyone that you come in contact with. You customers, suppliers, employees and any association that deals with you will respect you and help you build a good image for your organisation.

It’s worth building a right reputation in business.

5. Record keeping is not optional in a business and you should keep proof of every business transaction recorded. There’s no shame in asking for receipts.

Save your bills/receipts religiously, reconcile your bank statements or appoint someone the task and review monthly financial reports regularly. Your financial reporting is only reliable if your records are reliable. It will help you in dealing with your management, your accountants, auditors, tax authorities, bank and suppliers and customers.

6. Claiming expenses. Many business owners tend to get excited about claiming coffee and lunch bills from their newly formed business. However, you need to be pragmatic. The food & drinks bills are not always allowable and a £2 coffee receipt will cost you more in administration & time than any tax saving it would offer. Consider what’s material for your business and then avoid creating work for yourself or your bookkeeper for minor coffee bills.

7. Pay yourself. Every business is personal. If there are issues in personal life it will reflect on your business life and vice versa. Most business owners make financial sacrifices personally to grow their business. The best thing to do is to plan your annual required income that is necessary to run your life. Then make sure your business plan can afford to pay you.

This will also allow planning a scenario should the business become unable to pay for you. Such planning could save risking more than you’d like to.

8. Finally, as a bonus rule, don’t take the stress. Business venture comes with a lot of pressures. All you need to do is accept it but tell yourself that you are not going to be stressful about it rather you’ll focus on taking actions. No matter where you are going, you should be able to enjoy your journey and take every obstacle as an opportunity to develop yourself.

 

I hope keeping these guidelines in mind will help you become more successful and less stressful.  You will not find yourself scurrying around at the end of the month or the end of the year, trying to find receipts & docs; stressed out dealing with angry suppliers and taxman; chasing clients with legal threats for non-payments; feeling broke and out of control. Instead, you will spend your time getting better at what they do and continuing to grow the business and develop yourself with it.

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