There are a number of risks that you’ll face in business – from staff theft to a competitor using your intellectual property. It’s your responsibility to safeguard your business from anything that may impact on your survival and growth.
Review the following and decide what is critical (solve now), and what can wait (promise to schedule later).
Like most things in business, prevention is the best cure – a little planning now could save you a significant financial cost in the future.
Staff theft and fraud
To safeguard yourself and your business from being affected by dishonesty it’s important to take proactive steps to ensure opportunities for fraud are limited. You’ll need a firm policy of accountability and robust cash-handling systems that reduce the possibility of dishonesty.
Here are some examples of dishonesty that could have a significant affect on your business:
- Stealing products, or selling to friends at below cost.
- Stealing time (such as a staff member consistently leaving early).
- Travel costs and expenses.
- Filling up a spouse’s car with gas using the company gas card.
Solutions to protect your business
Here are some practical solutions to start safeguarding your business straightaway:
- Outline specifically what’s considered theft in any employment agreements with staff and what is deemed serious misconduct. Taking one piece of photocopy paper home may be ok, but taking a ream of paper is probably not.
- Train your managers to spot theft – a vigilant manager is the first and strongest line of defence against employee dishonesty.
- Regardless of who it is (even a key employee) you must be seen to take action, otherwise you’re condoning the action and it becomes ‘normal practice’.
- Limit credit card balances and limit who has them in your business.
- Require two people to sign product in and out of inventory management systems.
- Remove cash handling by going online for all receipts and asking business customers to pay online. Scotia online banking is a great option to tighten up your cash handling processes.
- Set up inventory control software and systems to track all products in and out.
- Bank any cash at least daily, if not more often depending on the amount of cash you carry.
- Pay for expenses via a credit card rather than petty cash.
Customer payments fraud
Customer payments fraud is simply any kind of customer deception that leaves you out of pocket.
Here are some of the main threats to be aware of:
- Cheque fraud - A person commits fraud by writing several cheques in a short period, knowing there are insufficient funds to cover all of them.
- Credit card fraud - When someone illegally uses another individual’s credit card or uses a stolen card.
- Counterfeiting - A person could attempt to pass counterfeit cash or counterfeit cheques.
Here are our top tips for preventing customer payments fraud:
- Perform credit and security checks on any credit you offer to other businesses, and don’t forget to check the debt history of the owners.
- Only accept advance payments, or at least a deposit before commencing work to cover your costs.
- Educate your staff on common fraud techniques and how they can spot them.
- Allow only a select few employees to accept payments.
Theft of ideas or brand
As competitors come into the market, you may find people copying any success you’ve had. Make sure you have your intellectual property protected. You don’t want others to piggy back on your hard work. The main forms of intellectual property are:
- Copyright – anything you do is almost always copyrighted by default
- Trade marks – like a logo or brand name, where you will need to apply for it to be accepted
- Patent – a process or invention, that you will also need to apply for approval.
Visit the Canadian Intellectual Property Office for information on the basics.
Theft of intellectual assets
Intellectual assets are things that you can’t always protect legally, as it’s too hard or too expensive. For example, it could be a relationship with a client, knowing customer buying cycles, or the time you’ve spent understanding a client's needs. This information is hard to protect but a valuable asset all the same.
- Sign a Non-Disclosure Agreement with key clients.
- Draft confidentiality agreements and restraint of trade clauses with staff so they don’t take your secrets to a competitor.
- Make an effort to keep your IP secret when speaking to others in your trade.