Preventing Theft at Your Small Business

There are several risks that you’ll face in business – from employee theft to a competitor using your intellectual property. Protecting your business from theft, however, means safeguarding your business from everyday losses that add up over time.

Like most things in business, prevention is better than a cure; a little planning now could save you from huge financial loss in the future. Review the following list of some of the common issues faced by businesses.

What does employee theft look like?

Employee misconduct may not happen at every small business, but every business owner should take proactive steps to reduce the chances of theft. A good starting point is a written and actionable policy of accountability and robust cash-handling systems.
Examples of employee misconduct: 

• Stealing products or stealing and selling to others at a lower cost. 
• Stealing work time (such as an employee consistently leaving early or wasting time at work and keeping other employees from getting their work done). 
• Excessive and unauthorized employee travel costs and expenses. 
• Employees filling up their personal car with gas using the company-issued fuel card.

Solutions to protect your business

Here are some practical solutions to protect your business from security threats and everyday losses: 

• Clearly outline what’s considered theft in any employment agreement. Taking one piece of photocopy paper home may be fine, but taking a ream of paper may not be. 
• Train your managers to spot theft – a vigilant manager is usually the first and immediate line of defense against employee misconduct. 
• Limit the number of employees assigned a business credit card and set card spending limits. 
• Use stock control software and systems to track inventory. 
• Require two people to sign products in and out of inventory management systems. 
• Reduce cash handling by switching to online payment software. 
• Use secure technology such as remote deposit and Lockbox to keep your funds safe. 
• Consider professional liability insurance.

How do I protect my brand and ideas?

As competitors come into the market, you may find people copying your success. Make sure you have your intellectual property protected. You don’t want others to piggyback on your hard work.

The main forms of intellectual property include: 

• Copyright – protection for original works of authorship, including literary, dramatic, musical, and artistic works. 
• Trademarks – protection for words, phrases, symbols or designs that identify the source of the goods or services. 
• Patents – protection for inventions or discoveries.

For more information regarding protecting intellectual property, visit the United States Copyright Office or the United States Patent and Trademark Office.

You can protect your intellectual property by: 

• Signing a non-disclosure agreement with key clients to reduce the chance they will tell everyone how you do business. 
• Drafting confidentiality agreements and restraint of trade clauses with staff to deter them from taking your trade secrets to a competitor if they leave. 
• Implement risk reduction tactics as part of your operating procedures. 
• Limit access to trade secrets and other proprietary information to only a select few individuals.

Summary

As with most things in business, protection from theft and fraud is down to being proactive, prepared, and having good systems in place to both discourage and detect theft and fraud. Remember the saying: It’s better to prevent fires than it is to fight them.