Like millions of other Americans having your own business has always been a dream of yours.  But, unlike most of them, you went out and did it.  You put time, money and effort into making your company a success.  You made the dream a reality.  Congratulations.

So, are you letting someone else take it all away from you?

Before you say no, really stop and think about it.  The answer might be the difference between staying open or not.  Every year occupational Fraud, or Employee theft, is responsible for closing about 30% of small businesses (U.S. Department of Commerce, 2015).  The reason is simple math.

When employees Steal time, money, supplies and products, many companies cannot absorb the financial damage.  Participants in the 2015 Global Fraud Study “Report to the Nations on Occupational Fraud and Abuse” estimated the average small business loses approximately 5% of revenue each year to employee theft (The Association of Certified Fraud Examiners).

Five percent often means the difference between a profit or a loss.  Even if your margins are good enough to stay in the black after a 5% hit, it can be the difference between paying yourself a living wage or not.  Given how common and harmful theft is, it is baffling why so many owners are unprepared and unwilling to fight it.  The only strategy most have is denial.

They think it will never happen to them.  But, unless you are the exception to the rule (and you are not) your employees have stolen, are stealing, or will steal from you.  Depending on the study, 75% – 85% of employees admit that given the right circumstances they have or would steal from their employer.  Contrary to most owners belief’s, how they felt about their boss (liked him or hated him) played little or no part in their decision.

The right circumstances are simply a combination of motive, means and opportunity.  All three components have to be available for fraud to happen.

Motive is the rationalization a person uses to steal time, money and property from the company.  A rationalization is a reason he makes up and uses to justify his behavior.  This reason gives him an excuse to steal.  These reasons are as different as the people who make them.

“I’ll pay the money back.”  “I don’t stop at home during work very much.  What he doesn’t know won’t hurt him.”  “I’m not getting paid enough, he owes me.”  “It’s not a lot of supplies. I’m just doing a little bit of side work.”

Motive is not enough for fraud to occur.  A person also has to have the means – ability, knowledge and access – to manipulate the system.  A bookkeeper embezzles money because she knows how to.  Stock goes out the back when the supervisor develops an inventory method only he understands and controls.  A landscaping crew’s productivity is 30% lower than another one because they leave later in the morning, take long lunches and quit work earlier.

Finally, even if an employee is ready to steal (motive) and knows how to do it (means), the opportunity must also be there.  If there are controls, checks and balances in place fraud can be significantly decreased or stopped.  The bookkeeper may want to “borrow” your money and knows how to take it, but if you monitor the books, understand the financials and sign the checks she cannot get to it.

Every year billions of dollars, millions of sweat equity hours and endless hope are poured into starting and maintaining small businesses.  Building a successful one is still a part of the American Dream.  Do not let someone else take yours away from you.  A smart and success business owner will understand the elements of employee theft and use the knowledge to stop it.

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