FORTUNE Small Business: | |
Where side businesses blur ethical lines
When parlaying your on-the-job experience into a side business, mind your ethical obligations to your employer and your customers.
(FORTUNE Small Business) -- Dear FSB: I'm a mortgage lender who works for a corporation. I have been conducting seminars on my own for my clients and charging $49 each for them to attend. Do I need a license to do this?
- Ginny Fey, Kirkland, Wash.
Dear Ginny: The answer to your question really depends on the nature and intent of your seminars, says Dave Erickson, president of the Washington Association of Mortgage Brokers. You are generally free to offer your clients seminars unrelated to mortgage lending.
"If you were to offer a class, on - for example - knot tying and charged a fee, it would be permissible, so long as people didn't object to the fee," wrote Erickson in an e-mail.
The picture gets more confusing if the courses are related to your profession and if attendees are looking for credits to satisfy professional licensing requirements. In that case, both the class materials and curriculum need to be submitted to the Washington State Department of Labor and Industries for review and approval before you can begin instruction. Among other things, the Department of Labor will be looking to see that the subject of the class is related to the practice of mortgage lending in a way that is deemed creditable.
The bigger and more important question may be whether its proper for you to divert your employers' clients to a side business that you own, says Jim Hoopes, the Murata Professor of Business Ethics at Babson College in Wellesley, Mass.
"That sounds very dubious, from both the clients' and the employer's perspective," Hoopes said.
There's nothing wrong with charging for seminars based on your expertise in particular area. After all, even Socrates charged his students. However, your dual role as employee and entrepreneurial instructor complicates matters. For one thing, your business relationship may make clients feel obligated to sign up for your seminars when they otherwise might not. Also, you're profiting from your employer's good name without sharing the proceeds back with your employer, Hoopes notes.
"The only proper thing for her to do would be to set up a hands-off relationship with your company's clients," he says.
If you feel that there's a real need among your employer's clients for your services, try making a deal with your employer to offer it within the context of your present job or, at least, to strike a partnership with your employer that shares the revenue from courses.
"Even then, there's an obligation on the part of both the employer and the broker to make sure that there's no conflict of interest between the services they're providing and the course," points out Hoopes, who is the author, most recently, of Hail to the CEO: The Failure of George W. Bush and the Cult of Moral Leadership.
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