Growth

Can business ever be 100 per cent ethical: The realities of making a profit

- November 16, 2021 3 MIN READ
ethical

Creating a profitable business is already a complicated mission, but creating one that is 100 per cent ethical can make it even harder to accomplish, writes Oriane Juncker founder of mum-to-mum marketplace, Spotz. 

Being ethical in business means you consider the impact of your actions, services and products upon society and the environment. As the founder of Spotz, I am constantly looking for new or better ways to build our community upon a foundation of strong principles.

Why is it difficult to remain 100 per cent ethical in business?

Where there is money to be made, so too are tough decisions. As the success of a business is measured by its profitability, instantly business owners with a good heart find themselves facing inner conflict.

Speaking from experience, it is tricky to run a business without running into ethical issues head-on. So far, I’ve been able to make sound decisions that are of benefit to consumers, vendors and staff, but it isn’t always simple – or cost-effective.

When we decide to operate a business ethically, we are often forced to ‘pay a price’, which usually means sacrificing part of the business’ turnover for the greater good.

I believe we need to stop isolating ‘ethical businesses’ as different because all businesses should be intrinsically ethical by nature. With our social conscience improving collectively over time, businesses should no longer make decisions based solely on profit reward.

Challenges I faced (and how I navigated them)

AfterPay

The CEO of a well-known retail chain once told me that the most beneficial thing you can do to increase your conversion rate is to introduce Afterpay at your checkout. However, this triggered many questions for me.

I felt Afterpay gave people the illusion that their bank accounts were endless, therefore encouraging them to spend more. I needed to understand how and why people used Afterpay and other such ‘buy now, pay later’ schemes, so off I went in search of answers.

After multiple discussions with friends, colleagues, family and acquaintances, I came to the conclusion that it really comes down to free will. It wasn’t ethical for me to deny a customer a different method of payment because it conflicted with my (limited) knowledge of the scheme at the time.

Once I discovered that people really do want different financial options when it comes to making purchases, the decision to offer Afterpay was simple.

Dropshipping

From what I knew of drop shipping, the delivery method is known to have a negative effect on the planet. So understandably, I was concerned that some of our vendors used this in their online stores.

Again, I had to reign in my personal beliefs to focus on our main purpose as a business: to support mums in becoming independent by creating their own flexible businesses that allow them to earn money on their own terms.

After much consideration, I decided to share relevant dropshipping information with our vendors so they were aware of the impact this practise has on the environment, and respected them to decide for themselves.

Commission rates

Ultimately, I wanted our mums to earn as much money as possible on our platform. However, for Spotz to remain profitable, I needed to find the right balance.

After much discussion with the relevant stakeholders and working out the numbers, we settled on 9% commission + GST on sales. It’s a system that works for Spotz, but more importantly, our vendors and customers, too.

So is it possible to run a 100 per cent ethical business?

From my experience, yes. But be prepared to put in the hard yards and make tough calls. Staff and the relevant stakeholders should be consulted before any new practises or processes are introduced, particularly if they affect the profitability of your business or have a negative effect on a person, group of people or the environment.

If we want to create a better world for tomorrow, business owners need to adapt their mindset of what I means to be a successful business. Spend time implementing ethical practices that benefit your consumers and investors, and remember that remaining profitable is key, but the way in which you achieve this is integral to the footprint you leave behind in the future.

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