On April 5, 2017, Chris Franks, a local entrepreneur and business advisor hosted CU Denver Business School students for the April session of Lunch with Leaders (LwL). A new program sponsored by the Daniels Fund Ethics Initiative at the University of Colorado Denver Business School, LwL matches successful business owners with Business School students to discuss real examples of ethics in business.
An unsettling introduction to unethical behavior
After a failed first attempt at a business, Franks and a friend launched Real Good Technologies, a mobile communications firm providing specialized text messaging for political campaigns. From the start, the company faced a series of roadblocks. Chris nor his business partner were technical people, so they invited a third individual to handle technology. In return, he received one-third ownership of Real Good Technologies.
According to Franks, none of the three owners thought to draft organizational documents, which would provide a legal framework for the organization’s structure. “Marriage is easier to get out of than business,” he explained.
With tension infecting the company’s leadership, Franks and his original partner decided it was time to sell the company.
At this point, the partners experienced a major breech of business ethics. They had a buyer and the transaction was moving along nicely. In fact, things were going so well that Franks and his partner agreed to provided Real Good Technologies’ intellectual property prior to receiving payment for the company. Closing day came and went. Franks and his partner were never paid.
The buyer offered a range of excuses and promises, all of which led to nothing. After filing three Federal lawsuits against the buyer, Franks and his partner have only received about $10,000 of the $1 million-plus they were promised.
Is it unethical to fight back?
Franks was, well, frank with the students about this brush with unethical behavior. If the buyer was not going to pay for the technology, Franks could have considered retaliation. With a background in digital marketing, he could have easily used social media to impact the buyer’s business. However, the partners wanted to feel good about the way they handled the situation. And with many of his investors in politics, there is still a fiduciary responsibility to try and recover funds.
Seize the opportunity
According to Franks, students who have recently graduated are perfect candidates to launch businesses. In general, most are relatively young and have fewer responsibilities. Most do not have long-term commitments–like mortgages, spouses and children–yet. Their lack of baggage presents a world of opportunity.
Remain true to yourself
However, Franks cautioned, new entrepreneurs must be prepared to handle a variety of ethical challenges from many different angles.
For example, many will face pressure to conform to investor ideas and desires, even if the investors’ plan does not exactly match up with the company’s original intent.
“Very often you will have to be thoughtful around how honest you will be,” Franks said. The potential for additional capital can be enticing, and some business owners are willing to change their fundamental concepts to secure the cash infusion. This is a slippery slope, on which the business owner can quickly lose sight of his or her original concept.
Consider the dilemma from other perspectives
Truly ethical business owners must be aware of how their decisions will impact others. They need to run a profitable organization, but every decision will affect a range of people. Employees need to feel secure in their jobs and ability to provide for their families. Clients or customers need to believe in the value they’re getting from a business. With so many factors in play, acting ethically toward all parties involved can be tricky.
What it takes to make it
“The best entrepreneurs,” acknowledges Franks, “know what they know, and know what they’re good at. Then they surround themselves with people who are skilled in the areas they are lacking.”
Find out more about Chris Franks at MadSmarts.com.
About the Daniels Fund Ethics Initiative at the University of Colorado Denver Business School
The University of Colorado Denver Business School received a grant from the Daniels Fund to participate in the Daniels Fund Ethics Initiative, which is aimed at teaching students principle-based ethics, emphasizing real-world application of ethical principles, and extending ethical behavior beyond campus and into the community.
The Daniels Fund Collegiate Program was launched in 2010 with a $7.5 million grant and eight participating schools, and was renewed for another five years (2015-2019) with an $11.25 million grant and the addition of three more schools, including the CU Denver Business School.