10 Common Ethical Dilemmas in Entrepreneurship

What is one common ethical dilemma small business owners often face, and how can you overcome it?

The following answers are provided by members of Young Entrepreneur Council (YEC), an invite-only organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, YEC recently launched BusinessCollective, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses.

  1. Nepotism

When you’re considering job candidates, it’s important that nepotism doesn’t drive hiring practices. Not only is it unethical to hire a less qualified candidate purely because of their relationship to you, you also do your company a disservice by not hiring the best person for the job. Make the success of your company your primary goal and nepotism will never be able to get a foothold.

Rakia Reynolds, Skai Blue Media

  1. “Accidental” Copyright Infringement

Many new business owners are consciously unaware when they’re infringing on the copyrights of other creatives, especially when it comes to using images and “everyone knows it” content. Unfortunately, ignorance of the law here can be a costly mistake. If you find yourself wanting to use something that you didn’t create yourself, it’s important to get permission from the rightful owner.

Nathalie Lussier, AmbitionAlly

  1. Overworking Your Staff

Small businesses sometimes ask too much of their employees without noticing. It’s a given that everyone on a small team will have to pull their weight and wear multiple hats, but you need to be conscious of where to draw the line. For example, if you hire someone for marketing, don’t just push them into a different department because you need support there; it’s not what they signed up for.

Dave Nevogt, Hubstaff.com

  1. Tax Accounting and Commingling of Expenses

As a small business owner, the most challenging thing to get right is tax accounting. The primary issue is commingling of assets and properly attributing expenses across personal and business. If you don’t get expensing right you can end up in trouble with local, state, and federal tax authorities. The easy fix is to not commingle, but at every step you should seek the advice of an experienced accountant.

Kristopher Jones, LSEO.com

  1. Maintaining Control Over Employee Behavior

In today’s environment, it’s a must that you have guidelines in place as to what constitutes workplace harassment, discrimination, and bullying. There should also be clearly set consequences for what happens when these policies are violated.

Andrew Schrage, Money Crashers Personal Finance

  1. Sticking to Your Mission

For certain businesses (like finance), your mission is more than a marketing statement; it’s an ethical code that needs to be upheld at all costs. When you’re just starting out and have limited resources, it might seem tempting to ignore this to grow quicker and compete with the top players. But ignoring ethics will always come back to bite you, no matter how far ahead you get.

Elle Kaplan, LexION Capital

  1. Claiming Income

Many small business owners may get paid in cash for jobs or projects. So it may be tempting to hide this income rather than reporting it, especially given the fact that a business owner operates on tight margins. However, it’s important to implement a transparent system and ensure taxes are paid and revenue is reported accurately.

Peter Daisyme, Due

  1. Hiding Blemishes During Fundraising

It can be very tempting to slightly exaggerate things while on the hunt for investment and it is a very slippery slope with no real upside. You either lose credibility/trust later on or commit yourself to an unrealistic timeline that will only frustrate those who have bought into your dream. Be optimistic but realistic with where challenges might occur. Openness and honesty help ensure a good fit.

Douglas Hutchings, Picasolar

  1. Merging Personal and Business Accounts

It can be tempting to not report income, to put vacations on your business card, or to tap your business account when you need some extra cash. But this kind of behavior is dangerous and represents a slippery slope. Keep your business finances separate from your personal finances. Be reasonable with your expenses. And don’t avoid or ignore doing proper payroll or paying quarterly taxes.

Robby Berthume, Bull & Beard

  1. Hiring Someone to Write Fake Reviews

Harvard Business School published a paper estimating 1 in 5 Yelp reviews is fake. Many businesses creating an online presence are approached by third parties offering positive online reviews in exchange for cash. The temptation is high as online reviews can go a long way in building a brand. However, consumers are getting smarter at identifying fake reviews, so getting caught is real and has very negative consequences.

Sam Madden, PocketSuite, Inc.

BusinessCollective, launched in partnership with Citi, is a virtual mentorship program powered by North America’s most ambitious young thought leaders, entrepreneurs, executives and small business owners.



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