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Transparency in Business: The REAL Key to Making Wise Consumer Investments

keeping business practices in the openWith thousands of businesses in dozens of different sectors operating worldwide, today’s consumers have more choices than ever, not only in the goods and services they buy, but also in the companies they back through donations, share purchase and other forms of investment. As a consumer in this highly competitive environment, you should be using transparency as one of the leading factors in deciding which companies deserve your attention.

What Does Transparency Mean?

Transparency means that a company is open and honest with you and other members of the public. It readily provides non-confidential information, either upfront or by request, so that you are better able to make decisions about what to do next. The information can be anything from the status of a service request to the earnings for the quarter, but it always reveals something about what is going on inside the business.

Why Transparency Matters

Poor transparency can mean a company is operating inefficiently, either because of a lack of resources or skills, or because there are interpersonal conflicts present among employees. This situation is negative for you as a general buyer because it usually means that you have to wait for what you need or want, or that what you receive is lower in quality or innovation. From an investment standpoint, it can mean lower than anticipated returns, as the inefficiency eats up profits.

Alternately, poor transparency can indicate that the company has ethical issues, hiding problems they know are present to keep up appearances and, therefore, income. If you’ve invested in a company with these problems, your money can go up in smoke when the public finally finds out the truth and scandal inevitably ruins the business’ reputation. In either case, trust suffers.

The Critical Role of Social Media, Blogs, Websites and Similar Channels

Channels such as websites allow you to interact with companies with great ease. You can make a purchase from an online store via your smartphone with just a few taps, for example. But the interaction should not be one sided. Blogs, forums, social media and similar tools all can be a way for a company to be transparent with you, whether that means chatting with you about product issues through Skype or posting a press release about upcoming company events, developments or acquisitions.

Aschere Energy is an example of a company using these channels to take a modern approach to transparency and build better relationships with customers. Their activity on sites such as Facebook stands out in their sector, as many energy companies purposely skew information to make themselves appear greener or more efficient than they really are.

The Bottom Line

Transparency is highly valuable to you as a consumer and investor. Without it, the likelihood that you will get unsatisfactory service or products goes up, as does the risk that you’ll lose other financial investments in a company. Thus, in general, it’s best to avoid putting your business or money toward companies that don’t provide transparency. Thoroughly examine how companies you use or invest in interact with the public before you hand over a single penny, and remember: new channels such as social media mean that good companies have absolutely no excuse for not being open and providing great experience.
Image: Freedigitalphotos.net/Pakorn

About Kim Parr

Kim Parr is a private practice optometrist, freelance writer, and personal financial blogger. You can follow her journey to 20/20 financial vision at Eyes on the Dollar.

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