Unethical decisions can ruin a business. Dishonest behaviors, such as falsifying financials, overbilling or misleading marketing, can tarnish a company's reputation, causing loss of customers and revenue. In some cases, unethical behavior is also illegal and can result in fines and even jail time for executives.

Unethical Accounting

Unethical accounting occurs when businesses bend accounting rules or falsify their financial statements to present a more favorable picture than actually exists. For example, a business may intentionally list higher assets but hide debt or other liabilities, perhaps to qualify for a loan or to sell a business. The most infamous example of a company that "cooked" its books is Enron, which has since gone bankrupt. Although Enron was a large business, a majority of "Inc." magazine's "Inc. 500" chief executive officers believe these unethical practices happen in small businesses as well.


Another example of unethical behavior is billing a client or government agency for more than the actual price of a good or service. A South Jersey doctor was convicted in April 2013 of charging Medicare for spending 2.5 hours with patients when she only spent 30 minutes, according to the "Philadelphia Inquirer" website. Even though she was only one of several medical professionals working for a small business that made house calls to patients, the business as a whole received negative publicity that will require considerable marketing to overcome. Circle, a sports gear company in Easton, Pa., billed school systems twice for the same services, and its executives are facing jail time, according to Oregon Live.

Misleading Marketing

Good advertising communicates the benefits of your product or service to potential customers and persuades them to buy. Promising what you can't deliver may increase sales in the short term but over the long term will lead to dissatisfied customers, resulting in negative publicity and possible legal action, says "Entrepreneur" magazine. Be careful of phrases such as "lowest prices." A better choice would be to say, "shop by Sept. 15 and get the lowest prices this year." Also be wary of phrases such as "guaranteed" or "results promised" if you're not absolutely certain you can stand by this claim, says "Entrepreneur."


Ethical decision making positively influences your bottom line, says "Inc." magazine. Instituting a system of checks and balances helps prevent unethical financial practices, according to the accounting firm of Miller, Searles, Bahr and Wills LLC. Encourage ethical decision making by developing a code of ethics and setting an example for following it. "Inc." suggests asking yourself several questions about decisions to determine whether they are ethical. Ask yourself, for example, if the practice is legal or fair. Ask how you'll feel about yourself after the action you're considering and how you would feel if the action was made public. Ask what you would do if your mother were watching.