Managing A Start Up And Ethics M5Presentation Transcript
Module 5 Graham Royce 2009
Rules & Regulations
People + Families
Managing the Start-up this is not about accounting however
Build your toolkit
Consider software packages such as Industry recognized accounting packages
Structure your accounts
Start with a minimum of accounts and add as needed
Establish an accounting routine – and stick to it
Reconcile accounts monthly
Update financial statements quarterly
Establish Good Accounting Habits 1. Record transactions regularly 2. Accuracy and consistency are essential 3. Fix mistakes as they happen 4. Manage and reconcile bank account regularly
The Many Roles of the Entrepreneur Manager Leadership Visionary Opportunity Seeker Communicator Technical Leader Customer Advocate Organizer/ Planner Decision-Maker Risk Manager Paperwork Completer Designer Owner Business Manager Process Leader Coordinator Team Builder And many more…
4. Compliance. Report your company’s incomes, expenses, and payroll accurately to the IRS. 5. Insight and Decision Making . Make informed decisions – and price your product or service for profitability – with financial reports 6. Funding. To be considered for a loan or investment, you’ll need complete financial statements. 1. Cash Flow. Track the money going in and out of your business. 2. Manage Customers and Sales. Know and understand your customers through consolidated records. 3. Production. Obtain goods and services. Apply for and establish credit with your vendors. YOUR BUSINESS
Accountant Next Week
Hire a Financial Controller, And an Auditor once a year
2. Buy an Accountancy Package, Hire your Auditor
3. Simply keep records, Retain an accountant to do books once a month, Retain an Auditor
You will be able to discuss in detail with him Three way’s of recording information
Cash Flow: Money In and Money Out YOUR BUSINESS Money In Money Out CUSTOMERS Sales Services / Products Out VENDORS Expenses Services / Products In
Current (cash, inventory, accounts receivable, etc.)
Fixed (property, vehicles, machinery, etc.)
Current (within one year)
Contributed capital: owner’s investment
Retained earnings (profits)
Assets = Liabilities + Equity Everything your business possesses Everything your business has borrowed Everything your business owns Area’s to manage
Staff the team; pick the right people
Empower the team and delegate effectively
Develop the team
Manage by influence
Structure the program effectively
Remove the obstacles
Develop business relationships with teaming partners
Develop teaming agreements that help the program succeed
Manage the Team
It is your responsibility to train
Health and safety stops with you
Business trends to watch for
Consider these headlines Standing up to industry: As corporations increasingly hold their purse strings, many researchers feel pressed to deliver favorable results -- Baltimore Sun June 26, 2001
The Scientist, May 28, 2001
When Corporations Pay for Research:
UCSF researcher disputes trial results from drug company
Risk Was Known as FDA OKd Fatal Drug Study New documents show Warner-Lambert trivialized liver toxicity of diabetes pill Rezulin while seeking federal approval. Inside help from senior regulators is trumpeted in company memos. Los Angeles Times March 11, 2001 Drug testing under ethics microscope USA Today August 7, 2000 Standing up to industry: As corporations increasingly hold their purse strings, many researchers feel pressed to deliver favorable results -- Baltimore Sun June 26, 2001
A personal value system used in determining what is right or good.
Typically associated with a system of beliefs that supports a particular moral code or view, e.g. faith
A value system widely adopted by members of an organisation.
What ethics means to most people
Ethics are principles or standards governing the conduct of communities, groups, organisations individuals & businesses.
Ethics is more than morality which is primarily concerned with general outcomes of good and bad, or right and wrong.
It is also about self-restraint
Not doing what you have the power to do An act isn’t proper simply because it is permissible or you can get away with it.
Not doing what you have the right to do There is a big difference between what you have the right to do and what is right to do.
Not doing what you want to do An ethical person often chooses to do more than the law requires and less than the law allows.
What actually is business ethics
“ Almost all the respondents said they are willing to pay more for shares of companies with ‘good’ governance, and in the case of Indonesia, they said, a 27% premium on the average is appropriate for such a company” World Banking Group Robert Felton –McKinsey & Co “ There is significant evidence from a large and growing body of academic research that there is at minimum a neutral, and quite likely a positive relationship between responsible corporate practices and financial performance” Sandra Waddock – Does ethics correlate positively with company’s profitability?
Unethical behavior may include the following
Breach of international or local laws
Breach of organisation’s values or standards of conduct
Intentional breaches of promises or agreements
Breaches of minimum standards relating the treatment of employees
Breaches of environmental laws or standards
Non disclosure of material information during proposals or negotiations
Damage the reputation of the organisation
Expose the organisation to litigation from affected parties
Expose the organisation to civil and criminal sanctions from the regulators
Expose the BOD to risks of criminal prosecution
Create a culture within the organisation that does not value ethical behaviour
Lead to further unethical decisions to continue or cover up the initial unethical choice
The risk of being unethical
• Reduce costs
• Increase long term profits
• Increase confidence in business dealings
• Make choices that are not compromised by past
• Encourage others
• Improve relationships with colleagues and business partners
Promotion of good business ethics can : Our ethics code is . . .
Define values to which the company will adhere
Obtain political support from internal stakeholders
Start with the tone at the top
Develop a robust internal control system
Apply a zero tolerance policy, however manage the change process carefully
Provide rewards as necessary
Developing ethical culture within the company
These are apparent when personal values of employees conflict with the requirements of organisational tasks.
Individual Versus Organisational Conflicts EXAMPLE A salesperson may consider the company policy of giving large discounts or personal gifts to selected customers to attract their business unfair and unethical.
Locating hazardous facilities in communities and manufacturing defective products or products with harmful side effects.
Toxic waste disposal that may not yet be regulated by law may be harmful to the natural environment, e.g.
countries such as Benin, can more than double their annual GNP by accepting nuclear waste from industrialised countries
Republic of Benin , is a country in Western Africa
UK scrap merchant accepting decommissioned US warships containing hazardous materials
Conflicts Between Interest: Example
Conflicts between businesses and society arise when businesses acting in self-interest are judged to harm collective interests.
For example, an internationalising firm may experience conflicts between the ethical standards of its home country and the ethical standards in a new market.
Conflicts Between Businesses and Society
Businesses Ethical Responsibility To Its Stakeholder Owners/shareholders – Rightfully expect some form of return on their investment Employees - Rightfully expect respect for their worth and devoting their energies to firm Customers - Rightfully expect a seller to provide them with a reliable, safe product or service Suppliers - Rightfully expect to have an equitable relationship with firms they supply Community - Rightfully expect businesses to be good citizens in their community
Honesty & observing the law
Conflicts of interest
Fairness in marketing practices
Using insider information
Use of company assets
Pricing, contracting & billing
Thinking Through Ethical Problems A model of ethical decision making
Although many ethical principles are universal, e.g., do not kill, do not steal, some are culturally bound.
When this is the case SME may be confronted with difficult ethical dilemmas.
Culture & Business Ethics
A SME gives a ‘gift’ to a government official, in an attempt to build a relationship with the official that might be useful in the future.
The may be accused of bribery and corruption.
What then is the ethical thing to do?
Levi’s discovered a supplier employing child labour.
On investigation it found that:
many female employees brought their children to work
there was no local school
the small amount the children earned kept the family income above subsistence level.
built a school for the children under 14
paid the mothers the additional income the children would have earned.
Example Good Ethics: LEVI’S
This was a small price for Levi’s but made a big difference to the lives of the children.
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Although many ethical principles are universal, some are culturally bounded.
What is not ethical in one country might be common in another.
Despite this, there are ethical problems with adopting the ‘when in Rome’ approach to business.
Society believes that SME’s should adhere to a consistent set of ethics derived from a high moral code.