Is your business a target for crime or do you think it could never happen to you? Most small business owners are clueless about crime prevention and how to seriously protect their assets. According to the Association of Certified Fraud Examiners (ACFE), business revenues are lost at an estimate of 5% due to fraud.
According to the research, those smaller businesses of less than 100 employees reflect more than 30% of the fraud cases. Small business owners among larger companies suffer the greatest impact at roughly $150,000 per occurrence in the United States.
Why do smaller businesses suffer the greatest impact than larger companies? Read these factors to see why:
Lack of Planning and Experience – Most business owners and members of management are familiar with managing basic to advanced daily tasks, however, when it comes to protecting their assets, they are sitting targets. Instead of developing written policies and procedures, hiring a trusted/referred CPA, and seeking professional advice, they open their doors for business too soon.
Asset protection begins at the top and finds its way to the bottom. In a number of personal cases I have seen and investigated, a large proportion of thefts and fraud were committed internally. Some companies don’t bother to do conduct thorough background checks or put specific debit/credit card and cash handling procedures in place. To keep it simple, lack of planning, inexperience, and no specific written polices/procedures are the reasons businesses are an easy target for crime. Don’t be embarrassed to reach out to another business owner, professional or mentor for help.
Too Trusting – Many business owners want to do the right thing but are too trusting of employees and even contractors. Too often, business owners and members of management turn a blind eye to employees and assume they would never do anything to jeopardize their employment. To the contrary, employees must be held accountable for their actions and their ability to protect company assets.
If you suspect you have bad fruit in the bunch, be willing to look closer at individual activities on specific days and times. If you have cameras in place, conduct random checks around suspicious activities. Be willing to have another CPA take a look at your current CPA to determine if funds are disappearing and it can’t be explained.
No Clear Written Policies and Procedures – A large number of small business owners do not have written policies and procedures in place to safeguard their assets. They often depend on verbal communications instead of depending on placing a great system in place. Putting a system in place to mitigate risks, theft, fraud, and embezzlement crimes will allow you to sleep better at night even when you are not at the helm.
When you hire employees to work for your company, be clear on what their specific duty and scope of work. Your maintenance personnel should not be taking your deposits to the bank because he is a close friend of the family. Separate duties and make certain employees work within their job description.
Take a look at your cash and debit/credit card handling processes…(if you have one) and determine if your process is effective or ineffective. Be willing to update, amend, or change ineffective policies and procedures.
Impact of Lazy – The impact of cutting corners, not training, and placing the proper safeguards in place can cause your business to fail on epic levels. Protecting your business assets is an ongoing process and cannot be overlooked. Making business security an integral part of every aspect of your business process is vital to your business survival.
Change your negative habits, bad practices and view of your business into something more positive. Just because you started off on the wrong foot does not mean you have to continue in the same manner.
Business owners and members of management how can you improve your business security practices? Put the necessary safeguards in place to prevent theft, fraud, and other criminal activity. Make business security training a part of your everyday process and hold ALL accountable for their actions. Implement a system where employees can anonymously report suspicious or illegal activity on the job. Conduct random checks in all areas of your business to detect issues before they get out of hand and to let employees know you are watching your business.