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Does Your Small Business Have a “Code of Ethics?”

Jon Corzine testifies before Congress about losing investor money. (Photo by Alex Wong/Getty Images)

When a military unit goes into combat and meets the enemy, there are rules of engagement that Soldiers are expected to follow. They dictate when and how you will engage the enemy, and what level of force you will use.

These rules are not only based on the enemy you are facing. They also reflect the philosophy, ethics and culture of the United States. The enemy may not adhere to any rules, but our troops must abide by the “ROE” or there can be serious consequences to those that don’t.

Small Business Rules of Engagement

In business, there are also rules of engagement. These are the rules that dictate how you conduct your day-to-day business operations. As an entrepreneur, you probably already have a certain ethical business philosophy. While your competitors, on the other hand, may not have any ethics; and will use any tactic, ethical or unethical, to get the business

Who’s the Ethical Business Target?

There are times when business owners will go toe-to-toe. Even if this is the case, it’s usually the business that’s the target. A competitor normally won’t slander a business owner in their advertising, but they have no reservations in lying about the business. So what are the “rules of engagement” when the competition is out to get you?

Make Sure It Really Is An Ethics Violation

If your competitor is libelous about you in their advertising, that’s pretty cut and dried, and easy to prove in court. If you hear about it by word-of-mouth, that’s another story. Slander is more difficult to prove. When people pass information, they tend to embellish the story a little in order to make it more titillating. I would want to confirm the information from more than one credible source instead of taking rumor at face value. Overreaction could escalate rather than deflate a dispute. Set up a Google Alert to let you know whenever your personal or business name is mentioned on the net. People may be incorrectly bad-mouthing your business without your knowledge.

Can You Win The Ethics Battle?

Can you win this battle, adhering to your rules of engagement, and not stooping to the opposition’s tactics? The short answer is YES!

The first step is to assess what is being attacked. Is it the business in general or just certain products or services? The most common attack is price. It’s easy for a competitor to lower their price and give the impression that they offer the same products or services for less. In most cases, there will be some type of additional or hidden charges that surface down the road. Most battle-hardened commanders will tell you that they best defense is a good offense.

Here Are Your Rules of Engagement:

Never mention your competitor by name in your advertising. Educate your customers instead. For example, if I make custom furniture and I use ABC glue exclusively and my competitor uses XYZ glue that is inferior, my advertising campaign may educate my customer about he benefits of ABC glue. I can discredit my competitor and never mention their name or products.

Show your ethics with your expertise. If there is information about your business or industry in a trade magazine or other source, cut it out and send it to the newspapers or other media in your area. Give them your name and contact information and tell them why this information is important to their readers. Most likely, they will use you as a source. You will be perceived as the recognized expert on this topic by the newspaper in your area giving you more credibility with your customers.

Position Your Business Away From Your Competition. Positioning involves your customers thinking exclusively of your business when certain key words are mentioned. If I asked you to name a soup company, you’d probably say Campbell’s. But Progresso and Heinz also make soups. When you hear the brand name Heinz, you probably think of ketchup, and not soup. What words or phrases make customers think of your business? Can you create some? What really sets you apart from your competitors?

The Final Word on Small Business Ethics

As you can see, there are methods of defending your position without attacking your competitor and compromising your honesty of ethical business practices. Knowledge is only half the battle.  It’s always better to be proactive than reactive. Your “rules of engagement” will go a long way in achieving victory over your unscrupulous competitors. Just make sure you remember the famous words of Davy Crockett, “Be always sure you’re right … then go ahead.”

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