Chris ([info]randomchris) wrote,
@ 2004-02-08 22:10:00
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Sermon #12 ish
Is it possible to run a business, make a profit, and still have rigorous personal ethics?

This is a tricky one. I'm currently planning business stuff because I have an interview tomorrow about getting extra loan funding from the Prince's Trust (which would allow me to get an air travel licence) and they're unhappy about the profit percentage dropping in my projections. The actual profit that I make in the year according to the business plans does rise significantly - but flights will take relatively little effort for me to arrange, so I don't feel comfortable putting on my usual 15% margin, and have a margin of only 10% on flights. Any more than that is not, I feel, ethically appropriate. As a result, my gross profit margin on tours drops, and they're not too happy about this.

I feel that I run as ethical a business as reasonably possible. I use relatively small suppliers who need the work whenever I can (rather than multinationals who are already making obscene profits). I don't feel that the prices I charge are excessive, and they're always affordable (the travellers wouldn't pay them otherwise.) I try to make the tours as good an experience as possible so that they feel they've got their money's worth. Similarly, I sell concert tickets at a reasonable price, and try to make sure that the audience feel it's worth paying for. I'm very lucky in that I don't have to screw anyone over as part of my work - everyone involved is either doing their job and getting well paid for it, or paying me and getting (I hope) good value for money as part of that.

On the other hand, I have to balance this with paying my own salary. At the moment, my salary is the smallest possible amount that I can take out of the business and be able to afford things like repairing double bass bows unexpectedly, occasional trips to see people in other parts of the country, etc. Later on, however, I'm hoping to get my own place (despite the fact that I could theoretically continue living rent-free with parents) and also have some disposable income so that I can do things like buy food that isn't Tesco Value stuff, spend money on myself and the people I love, and just generally not have to worry about my personal finances. At the moment, I'm not even drawing a "skilled worker's wage" (cf Tommy Sheridan) but paying myself any more than I actually spend in a month feels like greed.

This means that I have to increase my personal drawings and profit margins, do aggressive competitive marketing (even if the people that I'm marketing to do essentially want to buy what I'm offering), and basically exploit my market niche a bit more rather than just sitting in it. And I don't want to be exploiting anything.

Is there a way to expand my business and improve my own situation as a result which doesn't compromise my ethical standards (which can be basically summarised as "love thy neighbour as thyself")? This is a tricky one. I can't see how charging people a little more is unethical if they're still happy to pay it (there are other companies out there who charge substantially more than I do, they're not having problems keeping going).

Essentially, it feels wrong to be doing this solely in order to increase my own standard of living. It's my inner Puritan, somewhere inside. I'm trying to rationalise this - what money I do make, I'll spend reasonably, and I try to always spend ethically (supporting small businesses and so forth) and I have good intentions for supporting charities, helping people who need it and so forth, once I actually have money to do so. It's not convincing me yet.

Questions for the audience:

How is it possible to combine ethical standards with a high salary - especially when you decide your own pay?

Is there any way that I can make my business more ethically sound?

Finally, why the hell do I feel so guilty about paying myself even half of what most people with similar responsibilities would expect to earn?!?!

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[info]ashfae
2004-02-09 12:01 am UTC (link)
Too tired for a well-thought out response. Ask me in person sometime. Meanwhile, brief answers to questions:

1) It doesn't sound to me as though you're desirous of a "high" salary...wanting a higher salary, one that'll give you freedom to pursue more opportunities than you currently have, is not the same as wanting a high salary. It's a question of whether the raise you desire is reasonable. This is a harder question, as the definition of "reasonable" is entirely subjective. But the business itself will generally tell you whether your salary is too high or not--if the price you charge is truly unfair, unreasonably so, people won't pay it. It's true that some may because they don't know better, but others will have a sense of what a fair price would be--or of what they'd be willing to pay--and will use your business based on whether or not you're in the right price range. It's a fine line, but it is an indication.

2) Your business practices sound exceedingly ethically sound to me. You pay great attention to making sure everyone involved gets what they want out of the transaction. Pretty much all business consists of compromise; if you're finding a compromise that everyone is generally happy with/willing to do, then it's successful. No such transaction will be perfect, because humans have imperfect wishes. You just do the best you can. If you maintain your ethics as you have done, I don't see what you have to feel guilty about.

Keep in mind--you're not providing something people need desperately or can't do without. You're providing a service that's exceedingly useful, and specific to a particular client base who can use someone who understands their concerns, but nothing they can't do without--and therefore, technically, a luxury. And therefore, your customers have a choice, they come to you because they choose to do business with you. This makes it much harder for you to cheat them, because they don't have to do business with you, and can thus bargain.

3) Because you're a very, very considerate person. *hugs* And for all the difficulties that involves, the world needs more such people, and badly.

It might feel wrong to give yourself a raise solely to raise your own standard of living, but don't forget--this is your occupation. It's not a hobby or an experiment in ethical capitalism, though it may feel like both, particularly as it's work you generally enjoy. It's your job, and jobs are intended to provide one with enough money to live. Enough money to live does typically include being able to supply yourself with food, housing, and basics like electricity/water/etc. And because man does not live by bread alone, a bit extra so that you can actually live as opposed to surviving, for whatever fun or intellectual pursuits you need to keep your mind and soul functioning as well as just keeping a roof over your head. Some feel they need (or deserve) ferarris and weekend trips to the Riveria in order to to be living comfortably, but you're nothing so extravagent and really don't have any need to be feeling guilty about the things you want, which really are very reasonable desires.

Why you've read this far is beyond me; I have all the business sense of your average duck. Dad has all the business instincts in the family; I just have some basic common sense (least, I hope so). On the other hand, I'd guess that common sense will serve you better (particularly as regards your own ethics) than business instincts.

Okay, not so brief. Sleep deprivation = babbling Ashfae. Hope that was at all helpful...

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[info]smhwpf
2004-02-09 12:16 am UTC (link)
I'm offering my opinion here from my own political standpoint as a radical-lefty-but-libertarian(ish) sort of person. Obviously there are many others.

In my opinion, there is no ethical issue involved in being involved in freely-entered into and honestly-conducted exchanges of goods and services for money, where these exchanges do not have adverse side-effects on third parties. (There are then ethical issues in what you do with the money, but that's further downstream).

If you are trading honestly, as I'm sure you are, and if your activities don't have deleterious side-effects (e.g. pollution, arms trading, drug-dealing etc. etc.), which they clearly aren't, then, again in my opinion, the big issues mostly start when you employ people.

Now, an employment relationship is generally freely-entered into, but the problem in a Capitalist society is that it is an unequal relationship, in the sense that capital is highly concentrated in the hands of a minority, leaving those who do not have access to capital obliged to sell their labour, often at exploitative wages and conditions, and having no ultimate stake in the fruits of their labour. Thus, the apparent freedom of the relationship is (in most cases) at least partially illusory, in that those who sell their labour lack other choices. The sweatshop worker who works 16 hour days for a pittance in dangerous conditions does so by "free choice" in one sense, but this is only because the economy is so loaded against them that it's that or starve. This concentration of capital is rooted in fundamentally unjust historical conditions, such as the expropriation of the land by the aristocracy in Europe, slavery in the US, and imperialism in the developing world. (The situation is different for a few employees, such as top knowledge workers, who have such a rare type of labour to offer that they are in a powerful bargaining position even in relation to owners of capital. But that's rare.)

Now, it sounds like at present you are a one-man-band, correct me if I'm wrong. Even if you were employing people, it doesn't sound like you're some massive Capitalist born with a silver spoon in your mouth, but probably having to borrow to get hold of your capital, etc. This doesn't necessarily mean there isn't a potential issue. Although people who don't have capital can sometimes get hold of it to start small businesses, this is of necessity only a minority; only those projects that expect to produce sufficient rates of return for the banks to fund someone without collateral will get the capital, and there can only be a limited number of these. Therefore, most people will still end up having to sell their labour; this creates the potential for exploitation by those that do have capital, even if they obtained it by their own honourable efforts.

Therefore, I would say that for a businessperson employing people, ethical capitalism involves insuring the employees get a fair deal. I don't think this has to mean everyone getting paid the same amount, that depends on responsibilities. I think ideally it is good for people to actually have a stake in what they produce, and in some sense be treated as partners in the enterprise rather than minions. Of course, for a business operating in a Capitalist society it is rather difficult, as the norm is so different.

But as for your situation, when from the sound of it you don't have employees to exploit, you're not some big monopoly who is able to screw the consumer, I don't think you should feel in the least bit guilty in charging what your customers are willing to pay, and increasing your profits, nor in drawing a higher salary. It sounds at the moment as if you are taking active steps to improve the social effects of your business , as well as giving good value for money, so I really think there is nothing to feel guilty about.

Having drawn your salary, there is then the question of the ethical stewardship of your income, how much to spend on yourself, how much to give away, etc., but that is something everyone faces, however we earn our money.

These are purely my opinions. Feel free to ignore them.

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[info]g42
2004-07-12 04:05 am UTC (link)
heh heh I was going to post saying something very similar to this, but you seem to have beaten me to it.

It's a nice surprise but not at all as satisfying as writing it myself. ;)

Gwen

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[info]leonato
2004-02-09 11:17 am UTC (link)
Don't forget that consumers should act ethically too. The people who employ your services should expect to pay you a decent wage, and cover your costs, debts, money for expansion etc. given the amount of work you do for them.
So don't feel guilty or inethical about taking a decent wage from your business.

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[info]ixwin
2004-02-09 12:36 pm UTC (link)
Yeah, I basically agree with what everyone else has said - remember it's as yourself not more than yourself - you're not expected to treat yourself worse than anyone else, and I doubt you'd condemn anyone in a similar position who ran their business in a way that enabled them to afford their own, modest, flat.

I suppose you might feel ethically happier if you can increase your profits by increasing the number of people you do business with, or the number of services you offer them rather than the profit margins per se, although I don't know how possible that is.

You talk about having a lower profit margin on flights than other parts of the tours because they're relatively easy to arrange. That makes sense to me, because your wage per hour or 'per unit effort' stays stable. However, I wonder whether you've thought about increasing the profit margin on things which are trickier than average to arrange based on that same reasoning. Also, having scales based on ability to pay e.g. student discounts, which might make you feel happier about charging others a little more.

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There's nothing wrong with charging whatever you like
[info]benparker
2004-02-09 12:57 pm UTC (link)
If you want to charge 10, 15, 20, even 100%, there's nothing wrong with that, it's not unethical at all. What would be wrong would be to quote one thing, and deliver another (e.g base your prices on 4* hotels and give people tents).

If you try to make excessive profits, then people will stop using you and use the competition; there's nothing forcing people to use Ensemble Tours, if they don't like the price or the service they can go elsewhere. Take whatever profits you like. The laws of supply and demand will regulate everything else.

The only thing you can do to make the business more ethically sound is only to deal with suppliers, and other businesses, that are also ethical. Switch banks to the coop, get your energy from suppliers that will designate renewable energy, use paper from happy trees. Having money is not something to be ashamed of and capitalism is not evil in itself, although the application of it can often be. Discuss!



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[info]churchguy
2004-02-09 01:38 pm UTC (link)
I live in New York. Do any of your tours need help at this location?

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Re:
[info]randomchris
2004-02-09 05:11 pm UTC (link)
At the moment, no, but I have had a couple of groups in the past interested in coming to New York that fell through for various reasons, so there may be more in the future - and I'd also like to get groups from America coming over here. If you've got anyone who wants to come to Scotland particularly, let me know.

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