November 27, 2022

Small Business Advice

Be Theft Resistant

Jerry Osteryoung | 10/5/2009
In this very slow economy, employee and customer theft is a growing problem. The more your employees and customers are financially squeezed, the greater the probability of theft of funds or assets.

The U.S. Chamber of Commerce estimates that employee theft accounts for somewhere between 20 and 40 billion dollars in business losses. The Chamber also reports that an employee is 15 times more likely to steal than a customer or non-employee, and 75% of all employee crime goes unnoticed. In addition, less than 10% of the employee base is responsible for over 95% of theft. Bottom line, theft represents a significant cost to most firms, but it is one that can be reduced.

The best thing you can do to prevent theft is to make your business theft-resistant. In other words, do everything you can to deter theft rather than dealing with it once it has occurred. Like most things, making your business theft-resistant requires a plan and some research into where your vulnerable points are. However, there are many common areas that most businesses share to work on to make your business as theft-resistant as possible.

One of the best means of theft prevention is installing surveillance cameras anywhere financial transactions take place. Some entrepreneurs are hesitant to take these measures out of concern that employee morale will decline as they no longer feel trusted. While this does frequently happen, it can be easily avoided by telling staff ahead of time what you will be doing and why. Most people seem to understand the importance of a deterrent.

Good background checks and pre-employment screenings are critical when theft-proofing your business. Start with honest employees and combine that element with anti-theft measures. Together, these are the keys to reducing theft.

Frequently, businesses hire applicants that have a blemish on their record (e.g. felony conviction) to give them a second chance. This is a disaster waiting to happen considering that these past issues are just the ones for which the applicant got caught.

Another practice that is so important to preventing theft is ensuring that each employee takes some time off every year. Frequently, employees are able to cover up theft by routinely altering the books. Taking time off would mean getting caught if they tried to do this.

Materials and fuel are vital areas to watch when making your business theft-resistant. Controlling access to both your fuel and credit cards is so important, and staff should be made aware of the fact that you are monitoring these.

Taking inventory on a regular basis (more than once a year) is a great way to prevent theft. I have personally seen so many cases where theft of materials by staff members could have been easily avoided had a simple monitoring system been in place. Finally, whenever cash is involved, it is always good to have a system of checks and balances. For example, at the end of the day, cash is counted and signed off on by two staff members.

Now go out and develop a plan to make your business as theft-resistant as possible and then implement this plan.

Jerry Osteryoung is the Director of Outreach of the Jim Moran Institute for Global Entrepreneurship in the College of Business at Florida State University, the Jim Moran Professor of Entrepreneurship; and Professor of Finance. He was the founding Executive Director of the Jim Moran Institute and served in that position from 1995 through 2008. He can be reached by e-mail at jerry.osteryoung@gmail.com or by phone at 850-644-3372.

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