Within a retail business – and several other businesses too – theft is a real issue that can have serious financial implications. Large companies typically have a margin set aside for theft – or “shrinkage”, which refers to the unexplained loss of stock more generally – and so this is normally accounted for.
For smaller businesses, doing something similar might certainly be a good idea, but better still is to take active measures to prevent theft, not only because it can be more damaging for smaller companies, but because a poor security infrastructure will mark the business out as a target for thieves.
Furthermore, there are other costs of theft which are indirect and separate from the simple value of the stolen goods. Theft can lead to on to several other costs, mainly involved in addressing the theft. Some of these are fairly obvious while others are less so because they are not a direct result of theft.
For any business owner, it is wise to know about this sort of theft, what it really costs and, most importantly, what can actually be done about. A key thing to remember is that dealing with theft is not only about protecting specific inventory, but it should ideally be integrated into a wider security infrastructure that not only prevents theft but responds to it in the most cost-effective way.
For sure, security and safety are two things that any business should plan for. Every business needs to have a proper fire safety infrastructure, a process for dealing with accidents, and an anti-theft system in place. As mentioned, it is a good move to set aside a part of the budget for this.
When you have judged the cost of all the non-retail security operations, you can more effectively work out the most cost-effective anti-theft strategy for your business. Money should be set aside for theft just as it is for things like fire exits, fire extinguishers, laptop asset tags, warning signs, and so on.
Internal and External Theft
But before we can properly assess the costs of theft, it is important to know what type of theft is being talked about. Where retail businesses are concerned, most types of theft can be pretty neatly divided into external and internal theft.
External theft refers to any theft carried out by those who do not work for the company. This usually means visitors to a premises (shoplifting) or scammers who manage to trick staff/management out of money.
Internal theft is theft carried out by those inside an organization, which usually means company staff. It can also mean anybody who is granted some control over business operations for a period of time, and so internal theft can also be carried out by contractors and temporary staff. This type of theft also has the potential to be the costliest.
Actual Costs of Theft
So, the obvious cost of theft is the lost value of the stolen inventory. However, there can be other knock-on costs too. These include:
Costs of Investigation
If your business suffers an incidence of significant internal theft, then there is going be an investigation to find out who was responsible This is especially important in occurrences of internal theft because finding the thief (to prevent future theft) is necessary. In such cases, an ongoing investigation could take up employee time and company funds that would normally be spent simply running the business.
Insurance Premiums
After an incidence of theft, you might find that your insurance premium rises. This can mean higher monthly or annual costs as one of the longer-term costs of theft. Of course, there are other factors that might cause your premium to rise; sometimes it might not rise at all after an incidence of theft. Nevertheless, this is definitely one of the lesser-known costs of theft.
Customer Trust
Depending on what is stolen, you might find that your company’s reputation suffers. This can lead to an impression of your company as being insecure and particularly vulnerable to theft, which could in time hurt the business.
Some Theft Prevention Tactics
With all of that said then, here follows some top theft prevention tactics. As always, the best way to proceed is to make your business as anti-theft as possible and to discourage or prevent theft before it happens. A strong security system doesn’t just serve as means of dealing with theft, but of deterring it too.
Balance Security and Productivity
Doing this is the best way of determining what your upper limit of anti-theft funding should be. Sometimes, excessive security measures can eat into a company’s productivity. Furthermore, it is sure to do so if every theft is just responded to when it happens, and no real consideration is given to how much anti-theft funding a company can actually afford.
Use Employees Properly
A list of strict rules and consequences might not be the best way to enforce anti-theft policies in the workplace. The employees that will help most in preventing theft are those who are invested in the success of the company and see their own prosperity grow with it. Such employees are the ones most likely to help with theft, especially internal theft carried out by other employees.
Make A Fresh Inventory
After applying security principles to your place of work, the next thing to do is to make a fresh inventory of every asset you have. Then you can assess the vulnerabilities of each of asset and the people responsible for its security. You should also consider who has most access to each at-risk asset, as this is where to go looking when it goes missing.
Automate Theft Prevention Where Possible
Wherever you can effectively do it, it’s wise to bring in automation for theft prevention, as this frees up staff energies for actually doing productive work. And not only that, but the elimination of human error in such cases can go a long way to making the entire system more secure.
In conclusion, theft costs you more than the goods that you lose. Moreover, theft prevention is not only about responding to it, but preventing it as well. All of this should be factored in to the budget of a retail company – of whatever size.
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