Why bad business is bad for business

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Ethical handshake

We recently heard that African Global Operations, better known as Bosasa, was going into voluntary liquidation following the closure of its accounts by several local banks.

While this move was hardly surprising given the apocalyptic reputational damage suffered by the company as one bombshell after the next has been dropped at the Zondo Commission, it reinforces one of the oldest adages in business, and in life – what goes around, comes around.

One can almost picture the fat cats (a term used deliberately and with some irony) at the helm of Bosasa during their heyday sniggering and laughing as they boasted about all the politicians and bureaucrats they managed to bribe, coerce and influence as part of a deliberate business strategy over the past few decades. I wonder if they are still laughing as the true nature and scale of their corrupt business practices and complete lack of ethics increasingly becomes public knowledge, and the empire they so carefully and callously built crumbles around them?

The real question we should be asking is, what does this story of dodgy dealings, greed, arrogance and total disregard for the country, its people and our collective future by those tasked with leading us, actually teach us? What, if any, are the lessons that we as entrepreneurs, SMEs and just as human beings can take away from this sordid tale of corporate and political malfeasance?

For me, the biggest learning is that you cannot outrun a lack of ethical substance in your business. Being prepared to cut corners, grease palms, fudge figures and do ‘whatever it takes’ has a shelf life from a business strategy point of view. It may deliver short to medium term returns, it may allow a company to bulldoze its way into certain positions of perceived power, it may even make the directors filthy rich like it did with the Bosasa crowd. However, as we have seen, if your company’s moral compass is firmly pointed down, sooner or later that is where you are also going to end up.

We have seen it before with the likes of Enron, Bernie Madoff and closer to home KPMG and Steinhoff. These are all businesses that flew high, got used to the altitude but failed to self-regulate when the warning signs about a loss of cabin pressure started to appear. Not because these signs came too late, nor because they were not clear enough. These businesses could not alter their course because they did not have an alternative – their way of doing business was more entrenched and important than the actual products and services they supplied. When the time came to self-correct, they simply did not know how. The compass was stuck on one direction and that direction was the wrong one.

Small businesses and entrepreneurs are also often faced with ethical and moral dilemmas. Do we pay a bribe to win a tender? Do we fudge our tax returns to save a few thousand Rands? Should we overstate our performance to secure an investment or a loan? Do we give our casual employees a contract or just pay them cash and keep it off the books? The temptations to cut corners are many.

The problem is, sooner or later these ‘smallanyana skeletons’ have a way of emerging out of the closet. What will happen when you need a tax clearance certificate to win a contract? How about if SARS decides to do an audit of your books? You need to decide – are you looking for short-term success, or do you want to build a legacy, something that lasts beyond you and your lifespan but continues to draw inspiration from the culture and direction you set at the very beginning?

This month we sent out a survey to our Fetola database in which we asked people who they believed was responsible for setting the moral compass in our country. The choices were the President (20%), Government (24.6%), Business People (26.2%) and finally Citizens (58.5%). The results were both interesting and clear. Can we hold our elected officials, or our pastor, or our corporate sector, or even our staff, to a higher standard than that to which we ourselves subscribe? The answer is no.

If we are to beat the scourge of corruption and dodgy ethics and the resulting non-delivery and even abject failure it breeds – like we have seen with the likes of Eskom, Estina, Bosasa, SAA and many others – we must recognise that it starts with us. We the citizens, the little guys, the SMEs and emerging businesses, wield far more power than we can ever fathom. Imagine if all of us said ‘No more. I will not play that game, and neither will you!’

The pain we may feel as a result is real, the short-term losses and closed doors and lack of opportunities are not to be ignored. However, can you just imagine the long-term benefit of a collective recalibration of our moral compass as a nation? If doing bad business is bad for business – as we have increasingly seen – imagine what doing good business can do, not just for us as individuals but for the future health and prosperity of our nation.

About the author:

Anton ResselAnton Ressel has more than 20 years’ experience as an entrepreneur, trainer, business developer and mentor in the small business sector. He is a published writer and is the entrepreneurial specialist for Fin24. He heads up the mentor portfolio, providing guidance and input, and is part of the workshop facilitation team.