Centre for Entrepreneurship>Blog>Just because it's legal doesn't mean it's right

Just because it’s legal doesn’t mean it’s right.


When Lauren asked me to write a blog on 'Staying on the right side of the law' I cringed inside, how can I make a blog on that interesting? As everyone who runs a business knows there is a certain amount of 'Red Tape' which every business has to comply with. I could write about my experiences of completing annual returns for companies house and HMRC, of completing risk assessments to ensure that my businesses comply with H+S legislation, or perhaps even go into the bizarre, and often confusing Distance Selling Regulations and new Consumer Rights Act 2015, but let's be honest, you're already thinking how else you can spend the next 5 minutes rather than reading about that! Every business should comply with the law, but even though there is a lot of red tape, most of it is there to protect your staff and your customers from you being either incompetent or worse immoral and to be honest most of it is straight forwards, if not always obvious.

So let me ask a question, should good businesses do more than stay on the right side of the law? I'm going to talk about two case studies, one which has been in the national news, and one based on a conversation with a student.

Firstly let's consider the case of Google's Taxes (for Google substitute Starbucks, Amazon or any other large multinational company). Google is not breaking the law in how it has structured its business to avoid paying UK Corporation Tax, and some would argue that it has a responsibility to its shareholders to avoid paying unnecessary tax as this money can then either be returned to shareholders or reinvested in the business. How does this argument make you feel about Google and other large businesses? I would argue that business has a responsibility to the societies in which they do business, and that by avoiding paying taxes they cause damage to the society that they do business in, which in the long term will cause damage to their business. The more business is seen to 'do evil' the more reluctant people will be to engage with business, or to listen to the needs of business.

My second case study involves MLM (Multi Level Marketing) or Network Marketing. There is nothing illegal about MLM, although the structure is similar to pyramid schemes, MLM is not a pyramid scheme and therefore it is not illegal. What is often common across MLM schemes is that the products involved are overpriced, underperforming, or simply not great. Because of this the focus of anyone who is drawn into one of these schemes is to focus on the building of a network, rather than selling the product itself. The network becomes the product, and the only way to build a business is to continue to build the network. Once the focus has become building a network and not selling a great product the structure would appear to be very similar to that of a pyramid scheme. If it looks like a duck and quacks like a duck?? The business has stopped being product/customer focused and exists only to continue to build a network of marketeers. This is not business as I recognise it and therefore I would advise anyone who wants to run a successful and sustainable business to avoid any scheme which involves MLM or Network marketing.

In both cases the businesses involved have done nothing illegal, in fact they have probably spent many ££££'s or $$$$'s ensuring that they are absolutely legal to the letter of the law! Whether the way they have chosen to carry out their activities is moral is a question for you to answer. My point is that staying on the right side of the law is actually quite easy. Maintaining your moral compass whilst running a business might be a little harder.

Blog post by Steve Aicheler, Entrepreneurship Officer
February 2016