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Lessons entrepreneurs should learn from the expenses debacle

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But how important are ethics in the corporate world these days — and especially to business angels who lend money to help ventures to launch or grow?

If we were to believe the pleas of politicians attempting to justify their expense claims, we would imagine them all huddled around a tiny table, eating gruel, and piteously asking the kitchen mistress for ‘more’, in a very Dickensian scene. How could we possibly expect them to survive on the tiny salaries that they receive? Surely we would not begrudge them a little additional money to purchase the essentials needed for them to carry out their duties as our representatives? And surely a little tinkering with the truth is what we all do in our everyday life to profit from the world?

If you work in a business in which expense entitlement is part of the culture, I imagine that you’ll know people who do a little tweaking here, a few creative descriptions there, to get almost anything signed off. It’s just what people do, isn’t it? It’s accepted, isn’t it? These people see expenses as an addition to their bonus package — a pot of money to be used up each year — and don’t suppose that anyone cares what it’s spent on. It’s an attitude that has been going on for as long as expenses have existed.

Of course, there are plenty of others who would never do such a thing: some because they’ve never had expenses and therefore can easily take the moral high ground; others who simply didn’t know how to manipulate the system; and, of course, those who genuinely think that defrauding their company is just wrong.

But if you’re launching your own business and looking for funding, you’d better make sure that your ethics are squeaky clean—because business Angels will tolerate nothing less.

The days of a pat on the back and a pint in the pub for stepping all over someone else to get to where you want to be are gone. It’s all well and good to be passionate about success, to dedicate yourself to this goal, and to do everything within your power to achieve it, but if you’re looking to impress a business Angel with your business prowess, ‘cut-throat’ is out and ‘ethical’ is most definitely in—as long as it’s profitable.

What does this say about the business climate?So have CEOs and CFOs learned anything at all from the expenses debacle? Sure, they know that they should never let a BBC reporter get hold of their expenses for a moat or a duck coop — but above and beyond this little titbit, is there anything else?

A wise entrepreneur — especially one intent on attracting the funding and expertise of a business angel — will do well to recognise that, in a business landscape riddled with excess, it’s the ethically-run company that stands out head and shoulders above the rest. The best way in which to charm the money out of the pockets of a business angel is to demonstrate a well-run, morally grounded organisation that knows where every penny is made and spent.

Statistically speaking, a startups will either sink, swim or be eaten by the sharks within only months of their launch and, from the perspective of a business angel, companies that keep a close eye on their finances are most likely to show a return.

A business angel would not last long if all of his or her investments were to go belly up. The safe bet, the sure thing, the worthy investment is the one that respects money, protects profits, and takes the ethical path to success — and this is a venture behind which a business angel will be proud to put his or her name and funds.

*Bill Morrow is the founder of Angels Den, which offers entrepreneurs with bright ideas or enterprises of any size the opportunity to meet with investors whose funds can help businesses to reach their true potential.

Related articlesBogus expenses claims not just a parliamentary problemWhat MPs can learn from the private sectorExpenses scandal: punish MPs, not SMEsPicture source

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