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Running an ethical operation

July 21, 2008|Karen E. Klein | Special to The Times

Dear Karen: I own a small business and want it to operate ethically. How do I incorporate business ethics?

Answer: The two fundamental elements of an ethics program are a written code of ethics and a way for employees to anonymously report questionable conduct, said Doug Beeuwsaert, a consultant at Newport Beach financial services firm Lyndon Group.

"The code of ethics should be written in a collaborative manner, with a steering committee consisting of staff at all levels," Beeuwsaert said, "and implemented with senior management's backing." Find sample ethics codes online to use as a starting point.

Establishing an anonymous whistle-blower hotline, which can be a dedicated voice mailbox, encourages your employees to communicate concerns without fear of reprisal.

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Starting an online firm from home

Dear Karen: I'm thinking of starting a Web-based home business. It will feature articles, advice and templates to help small and mid-size business owners stay out of court disputes. What business model will bring in revenue and help us avoid potholes?

Answer: Your site can generate revenue by charging users or provide free advice while charging for advertising and sponsorships.

"Decide whether you are looking for immediate revenue or long-term growth," said Michael T. Hanley, an accountant with Merl & Hanley. "If immediate revenue is your goal, the site would typically be geared toward charging fees to the site users. If long-term growth is the goal, offering your site's services at no cost will translate into higher membership numbers, which will translate into higher advertising revenue" eventually.

You can avoid problems by establishing an appropriate legal entity for your business. If you set up an S-corporation or a limited liability company (known as an LLC) with more than one member, you will minimize your risk of a random tax audit.

Those business entities will also insulate your personal assets from any lawsuits relating to this company. It also may minimize your tax liability depending on the size of your business, Hanley said.

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On-site day care for employees

Dear Karen: Some of my employees are asking for on-site day care. Is this possible for a small company?

Answer: On-site day care is a powerful retention tool for a small company, but it is a costly benefit in terms of expense, time and effort.

Start by asking your employees what they need. Infant care? After-school care? Marne Reed, human resources director of PrintingForLess.com, found that most of her employees were looking for care for newborns through 5-year-olds. She turned to a local child-care resource agency for help in setting up the program.

The resulting child-care center and its high-quality providers cost the company more than $100,000 annually, Reed said, and running it is like starting a new business venture. "Integrating it into the rest of the company is an ongoing challenge," she said.

Having child care on site, however, has increased employee morale, productivity and retention. "It allows employees to focus on their jobs and not get distracted by worrying about their children," she said. Potential employees are impressed with the company's family orientation and its commitment to employee benefits.

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Got a question about running or starting a small enterprise? E-mail it to ke.klein@latimes .com or mail it to In Box, Los Angeles Times, 202 W. 1st St., Los Angeles, CA 90012.

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