Review Your Business to Prevent Losses

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Blog-1337564If you don’t have financial controls in place, it’s not a question of whether people will steal from you, but when.  The best way to ensure that your company won’t suffer from property or financial loss is to be savvy. 

As the old adage says, an ounce of prevention is worth a pound of cure.  Here are the five ounces of protection that you should have in order to protect your property, including physical, intellectual, and financial property.  None of the five has anything to do with buying insurance, but they give you the best possible protection for some of your biggest risks. 

1. Your best “insurance” against fire is a building with sprinklers.  Few companies recover after a major fire; starting again is difficult in so many ways. 

 2. Your best “insurance” against losing one of your most crucial resources—information—is off-site computer backups.  Whether it is inventory information, customer lists, ordering plans, or schedules, losing information can be a terrible disruption to your business.

3. Your best “insurance” against loss of intellectual property is to use employee intellectual property agreements.  These are designed to ensure that what employees learn about your company’s intellectual property won’t accompany them when they go home or leave your employment.  You don’t need to train your newest competitors.

4. Your best “insurance” against theft is a burglar system, especially one monitored by an alarm company’s central station.

5. Your best “insurance” against embezzlement is comprehensive operating systems.  This item is the one most ignored by companies.  The profits of small business are substantially cut each year by internal theft.  Forgeries, embezzlement, and manipulations by trusted employees siphon off sums sometimes substantial enough to drive even long-established firms into bankruptcy.  Theft by their own employees accounts for at least 30 percent of the losses suffered by small businesses.  Preventing major theft is a matter of establishing effective procedures for preventing them.  A full fraud prevention audit should be performed annually.