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9 Business Loss Prevention Mistakes That Could Cost You
Loss prevention helps businesses thrive and retain loyal employees.
You find employees who match your values. You reach customers who need your products and services. You have a good grip on your overhead.
Do you put much thought into loss prevention, though? Focusing on this one thing could save you tons of money, time, and headaches.
9 Common Business Loss Prevention Mistakes
1. Having No Definition of Theft
“Shrink” describes inventory hits caused by theft, shoplifting, and employee errors. The National Retail Federation (NRF) says shrink cost businesses $50.6 billion in 2018.
Employees know it’s wrong to take money from a register. Does a personal trainer know they’re stealing when they take a client list to a new gym?
Here are more examples of theft:
- Submitting bogus reimbursement expenses.
- Claiming pay for unfinished work.
- Taking intellectual property to another company.
- Creating false cash register entries and pocketing the money.
- Swiping office supplies.
Create a clear theft policy, and outline management’s role in loss prevention.
Say what disciplinary actions you’ll take when an employee steals. As you choose the consequences, consider termination, litigation, and pursuing restitution of funds.
2. Enforcing Rules Through Intimidation
How do you address this issue? Do you threaten or encourage?
You could force good workers to look elsewhere if you rule with an iron fist. Loyal employees might not consider stealing. A culture of intimidation won't lead to loyalty, though.
Tell your people you believe they’ll do the right thing.
You don’t want them to feel like they’re under a microscope. Plus, a good theft policy establishes clear consequences.
If you fire someone for stealing, everyone will know you mean business.
3. Skipping Shoplifting Training
Do you reward employees for catching shoplifters? Do you teach new hires how to spot thieves?
Employees should keep an eye out for suspicious customers who:
- Make frequent visits but never buy anything.
- Wear out-of-season clothes like baggy jackets and large scarves in the summer.
- Watch employees to see if they're paying attention.
- Arrive in groups and create distractions.
You want your staff to watch for shoplifters. At the same time, you don't want employees to accuse honest customers. That's why managers should always get involved.
4. Ignoring High Turnover Rates
You think you offer a great place to work. Does your staff feel the same way?
Terra Staffing Group says it’ll cost you about 33% of a salary to replace an employee. In other words, you'd pay nearly $10,000 to replace someone who makes $30,000 per year.
When you bring on a new employee, you might cover:
You could miss big opportunities by searching for replacements all the time.
You don't want turnover to give your business a bad reputation. Current employees don’t want to see their friends leave. Potential employees don’t want to work at a place where the faces change every week.
5. Not Having a Recognition Program
80% of companies have an employee recognition program. It’s pretty easy to offer service rewards and spot bonuses.
If you don’t know what rewards and recognition fit your employees, ask them. Some want public praise, and others might want a quiet “thank you.”
A solid recognition program inspires loyalty. It's a strong defense in the fight against theft.
6. Having a Vague Return Policy
Appriss says U.S. retailers lose an estimated $18.4 billion from fraudulent returns.
Score offers plenty of advice for strengthening your return policy:
- Know state laws before setting your rules in stone.
- Consider the condition of returned products.
- Set a return window.
- Require receipts or use a point-of-sale system.
- Only allow store credit on gift returns that don't have a receipt.
7. Using Security Cameras the Wrong Way
Don't make it easy for shoplifters to steal from you!
- Using poor lighting.
- Setting cameras at angles that don't allow you to capture facial features.
- Buying cheap or low-quality cameras.
- Installing equipment when you don’t have the proper knowledge.
- Investing in cameras but not a full security system.
8. Not Setting Social Media Rules
Very few employees should have access to your business social media channels. Set specific boundaries for your Facebook, Instagram, Twitter, and LinkedIn pages.
Provide examples of approved content, if needed.
While you’re at it, tell your employees to avoid:
- Selfies and videos that give away sensitive information.
- Posting pictures of their badges. Cyber criminals can use these images to create fake badges.
- Responding to suspicious social media messages.
Take a deeper dive with this blog post: “How to Manage Social Media Security Risks at Your Business.”
9. Having No Emergency Plan
Robberies, fires, and natural disasters happen. An emergency plan empowers your staff and should put them at less risk.
This may not technically qualify as a loss prevention issue, but it’s a smart move.
Here’s another smart move: getting business insurance through Pekin Insurance.
You can add coverage for theft reimbursement and much more! Get in touch with Fergurson Insurance today to put your plan in place.