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10 Business Loss Prevention Mistakes Most Companies Make
When you run a small business, loss prevention is one key to keeping your doors open.
When you run a small business, loss prevention isn't usually one of your top priorities. You're busy trying to hire the right people, market your product or service, network, and find time to sit down for a proper meal. You keep an eye on your bank account and file receipts for business expenses. You deposit cash each day, and you have a good grip on your overhead.
What you are probably skipping, though, is that small problem that's slowly eating away at your profits: theft.
It's a billion dollar issue. A $48.9 billion issue, to be more exact, according to CBS news. That's how much U.S. retailers lose each year due to shrinkage. And while shrinkage can include vendor errors, administrative errors, and other mistakes, theft (both internal and external) accounts for over 66 percent of that loss.
That's just retail. Intellectual property, client contacts, and proprietary information are valuable assets for startups and service-based professions like real estate agencies or health facilities.
Unfortunately, too many business owners and managers approach loss prevention the wrong way. These mistakes are, however, easy to correct.
10 Business Loss Prevention Mistakes You Don't Need to Make
1. Failure to have a loss prevention policy
Most people understand that stealing is wrong. When an employee takes money out of the cash register, they know it's illegal. But does that personal trainer know that taking a client list with him when he leaves is also stealing? If you don't have a policy explicitly stating what constitutes theft, you leave the definition open to interpretation.
2. Failure to check references
When perfect job applicants come into your store, you want to hire them. They're friendly, smart, and have an impressive work ethic. What you don't realize, though, is that they were fired from their last job because they were stealing tips from other employees. Of course, if you check references, you would know this before it turns into your problem.
3. Punitive messages
There are two ways to inspire honesty in your team: threaten them for dishonesty or encourage them to do the right thing. The Petrified Forest National Park in Arizona found that encouraging people to do the right thing (and leave pieces of petrified wood, rather than taking them) worked much better than punitive messages in reducing theft.
4. Ignoring high turnover rates
An article in Retail Dive points out that "companies with higher employee turnover also experience greater employee theft." This shouldn't be a big surprise. Unpleasant working conditions lead to unhappy employees, and unhappy employees don't care about your business.
5. Creating a hostile work environment
This goes right along with punitive messaging and ignoring turnover. A hostile work environment is a drain on employee energy and attention. It's your job as a business owner or manager to ensure that employees treat each other respectfully and that they have the trust and ability from you to ensure customer satisfaction. Employees who feel undervalued, underpaid, and uncared for aren't going to care about shoplifting or recording damaged goods.
6. Ignoring the benefits of engaged employees
According to the Loss Prevention Media Insider, "stores with the most engaged employees have been proven to have up to three times lower levels of loss than stores with the least engaged employees." Engage your team. Train them, encourage them, work beside them, and invest in them as people.
7. Using security cameras ineffectively
OCS Retail Support points out that security cameras with visible monitors are excellent at deterring potential shoplifters. Why? The monitors make it more likely that an employee or another customer will see them.
8. Using weak passwords
Not all business loss prevention is about retail items. Intellectual property is fair game, too. Bill Cary, Vice President of Marketing for RoboForm, mentions that "passwords are the first line of defense" in preventing cybertheft. Make sure everyone on your team uses a secure password on all of their work-related devices.
9. Disorganized records
Whether you run a restaurant, retail shop, or service business, if you don't keep good records, you may not even realize you're losing money. Balance your books each day. Take inventory regularly and compare it with sales. Use a CRM to track client communications. Don't let poor record keeping hide missing revenue.
10. No emergency plan
An emergency may include anything from a robbery to a fire to a wildfire evacuation. If you don't have an emergency plan in place, you put your business and your employees at risk. While this isn't specifically a loss prevention issue, your business does stand to lose a lot of you aren't prepared. Plus, it's just a smart move.
One more smart business loss prevention move you can make is getting business insurance through Pekin Insurance. Did you know coverage may include reimbursement for theft? Get in touch with Fergurson Insurance today to learn more.