In the 36 years I have been consulting with and coaching small business owners, one of the most difficult things I’ve ever had to do was tell two partners that a third partner was stealing at least $50,000 a year from their business. It probably was more. However, I felt horrible. I didn’t want to dig any further.
Theft is the most heart wrenching thing I have to deal with. You work hard. You never expect people to steal from you. When they do, your first reaction is disbelief, then sadness. Then, usually anger.
And, nobody talks about it. Until now. It is time that someone did. (Ugly Truth about Cash: 50 Ways Employees and Vendors Steal from You and What you Can Do about It)
Here is a interview I did with Kevin about this:
Small business owners like you work too hard and invest too many hours to have your money and other assets stolen. This theft could cause serious cash flow problems and damage your business if not caught.
I believe that 99% of your employees are honest. Some people steal the first time because of need. Something has happened in their life (divorce, sickness, death) and they need money. They stop thinking rationally and get emotional. Then they do things that they never would do when thinking rationally: stupid things like the bookkeeper that landed her in jail for three years because she forgot that the company loaned money to its employees. These are part of the 99% who are usually honest until tempted.
However, there are the 1% of employees who get a thrill out of stealing. The professional embezzler. It is the challenge. Can they get caught? It is a joy to them. As one very wise man told me, “The job of a good embezzler is to become the trusted bookkeeper.” The professional embezzler is very patient. She learns your processes or lack thereof. She works hard. She earns your trust.
Then, she takes a little. When you don’t discover it, that little turns into tens or hundreds of thousands of dollars until she quits or gets caught. Most times she quits abruptly for no apparent reason. Then you find out about it later when the next bookkeeper is hired.
And, it may not be your employees who are stealing from you. Your vendors can steal too. Their employees might be part of the 1%. Your vendors can change check amounts, create side deals with your employees, and more.
There are three major ways people steal: money, materials, and time. Most employees don’t think twice about surfing the web, excessive smoking breaks, taking personal phone calls, or texting on company time. In fact, most small business owners accept and pay for a small amount of personal time as part of an employee’s day.
How much do you put up with? How much is it actually costing you?
And, do you have the procedures in place to keep the honest people honest?
Over the next few weeks I will write about these procedures to help protect your hard earned money and assets.