HOW TO CONDUCT BUSINESS

Ethical business?

Business ethics implies conducting business in a way that benefits society as a whole, while also serving one's own interests. Every strategic decision has moral consequences. These ethical decisions in business have implications such as a happy workforce, increased sales, lower regulatory costs, more customers, and increased goodwill.?Virtually all of the world's great religions contain in their religious texts some version of the Golden Rule: “Do unto others as you would wish them do unto you”. In other words, we should treat others the way we would want to be treated. This is the basic ethic that guides all religions.

What I have identified as unethical practices are the ills of an unjust interest-based economic system. Let us first understand the ancient and spiritual perspectives of interest.

Usury was defined as “the practice of charging financial gains in excess of the loan's principal amount”. However, the modern definition has been tweaked to look ethical and acceptable. It is now defined “as interest at a rate that is higher than the legal or socially acceptable rate”.

Spiritual perspectives

Now let’s dwell upon the spiritual and religious guidelines, from both ancient and modern perspectives, that dictate the business protocols...

Ancient Hinduism:?In 400 BC, the Hindu lawmaker forbade the higher castes from being usurers or lenders of interest.

Modern Hinduism:?By the second century AD, Manu's laws stated that “stipulated interest beyond the legal rate being against the law cannot be recovered”.

Ancient Judaism:?Criticism of usury in Judaism has its roots in several biblical passages, where taking interest is forbidden, discouraged, or scorned.

Modern Judaism:?Jews are not permitted to charge interest to other Jews. The non-Jews, on the other hand, can be charged interest.

Ancient Christianity:?In the 5th?century AD, the Roman Catholic Church prohibited taking of interest. In the 8th?century AD, the action of usury was proclaimed a general criminal offence. By 131,1 Pope Clement V made the ban on usury legislation in its favour null-and-void.?

Modern Christianity:?They are not allowed to charge high interests as per the modern definition of usury. However, charging interest at a normal rate is allowed.

Ancient Islam:?Islam identified its ills and came out clearly against its prevalent use dating back to around 600 AD.?

Modern Islam:?The definition of?Sharia?compliance is changing. In fact,?Sharia-compliant companies are allowed to have a debt of less than 33% of their market capitalization.

The?Quran?did not just stop with an injunction on interest, but encouraged business and trade in the same sentence.

The Quran says: “Allah has permitted trade and forbidden interest.”

By being interest-free/debt-free the company has inbuilt advantages. Debt-free firms are low-risk investments, preferred by both amateurs and professional investors. Debt has a higher long-term cost, and a debt-free company pays a higher dividend yield and has a higher return on equity.

There are quite a few Indian companies that are debt-free or have achieved zero-debt status. The notables are HUL, ITC, Ambuja Cement, SBI Life Insurance, HDFC AMC Ltd, Castrol, Gillette India, etc.

Being debt-free eliminates all worries and side effects that debt can bring. It gives the sense of security that comes with the fact that you don’t owe anyone anything. It gives a thorough peace of mind.

Also, the Quran has given glad tidings and has glorified a true businessman by saying-?``Their doing business does not stop them from the remembrance of God.”

In fact, there are quite a few virtues described in the Quran and the prophet saying (hadith) for doing business. Doing business is not compulsory in religion but if one is in that profession, then doing business in the most ethical way is a must and compulsory for a businessman.

What are the ethical practices of a true businessman: I would like to dedicate an entire chapter in my book which is indeed very close to my heart.

Family entrepreneurship?

A family entrepreneurship is an enterprise involving two or more family members. Since the majority of the ownership generally lies within a family, decisions are sometimes influenced by multiple generations of people related by blood, which in turn has the ability to influence the vision of the business and the willingness to use them to pursue their goals, like any profit organization driven by wealth, and responsibility. In a family business, counterbalancing these economic priorities are family values of love, cohesion, self-esteem, and caring.

With each member in a family enterprise secure in his or her position, innovative ideas take shape quickly due to the family staff taking risks. However, there is one major reason for a family business to fail - succession planning. The lack of proper planning and poor leadership result in family conflict that leads to a loss of direction and ultimately collapse of the business.?

Our country has a high number of successful family businesses. As of 2018, India stood third on the list of family businesses with 111 companies. While these family-run businesses account for 85% of all Indian companies, they also account for the vast majority of national output and employment. However, we also have a large number of family-owned businesses in the Micro, Small & Medium Enterprise (MSME) segment.??

MICRO SMALL & MEDIUM ENTERPRISE (MSME)

As we already know MSME stands for the micro, small and medium enterprises. It was introduced by the Government of India (GOI) in agreement with the Micro Small Medium Enterprises Development Act of 2006. As per this Act, MSMEs are enterprises involved in the production, processing, and preservation of goods and commodities. Recently, the GOI redefined MSMEs in terms of their level of investment and turnover, so that more and more companies can avail of maximum benefits from the government schemes, subsidies, and SOPs. MSMEs are the backbone of any developing economy and it covers only the manufacturing and service industries. Currently, the total registered MSMEs are 51 million. Registering the enterprise as MSME is optional, but a registered one gets lots of benefits from government schemes like bank loans (collateral free) subsidy on patent registration, industrial promotion subsidy, protection against delayed payments, etc.