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Can you grow a small, bootstrapped company into a success without lying?

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Ethics in Business mentor Jeffrey Seglin responds to the following question from an inc.com visitor:
Can you grow a small, bootstrapped company into a success without lying to potential customers and suppliers?

Jeffrey Seglin responds:
I've actually dealt with this question before, in "True Lies," a 1998 article citing an ethics poll of Inc. 500 CEOs. Here's an excerpt from that article:

"Though it's rarely talked about, if you ask CEOs who started their companies with little cash -- on this year's list 43% began with less than $10,000 -- many of them will readily admit to a fabrication here and there. Not long ago, when Inc. surveyed the CEOs of companies on the1995 and 1996 Inc. 500 lists who had grown their businesses with little or no capital, 14% said that bootstrapping, by definition, requires 'unsavory business practices.' For some entrepreneurs,'unsavory'involves stringing out a supplier on a payment or two, but for others it means out-and-out lying.

"Of course, when you're first starting a business, all you're really doing is selling people on your idea for what you and your fledgling can do. Customers, vendors, employees, and everyone else you come in contact with want some reassurance that they're involved with a CEO ofsubstance, someone who exudes confidence and gives off a vibe of stability."

In the article quoted above, I take the stance that outright lying is unethical. But I try to draw the distinction between posturing and lying.

Not disclosing the full truth is sometimes acceptable in business negotiations -- such as when you go to buy a car and tell the sales rep that $20,000 is your first and final offer. Of course, it's rarely the case that it really is your final offer -- and you know it. The salesperson's first counterproposal to your initial bid isn't usually the final offer either. Such back-and-forth negotiating is an accepted (albeit annoying) practice in buying a car.

However, it's my belief that misrepresenting who you are or how long your company has been in business, lying to gain entry, or other blatant untruths is never acceptable business practice. Well, maybe it is considered acceptable in some quarters, but in my opinion it's just not ethical.

Copyright © 2000 inc.com

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Last updated: Jul 24, 2000




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