Stopping a financial trickle: Seven small business loss prevention tips
It can sometimes be difficult for small- and medium-sized businesses (SMBs) to remain competitive against their big box counterparts, as they don’t have the funds or the staff to devote exclusively to operational problems. Loss prevention is a perfect example. Any cuts into profits are felt more intensely by small businesses, and it can prevent business growth and increases to the bottom line.
On the other hand, SMBs are usually more nimble and able to implement changes quickly if there’s an issue, without getting tied up in a lengthy process requiring multiple approvals. To that end, we wanted to share some tips for small businesses to help minimize loss and maximize profitability.
- Prevent theft. Shoplifting by customers and employees is the most common topic addressed for loss prevention. It’s crucial to put security measures in place that prevent theft before it becomes an issue. There are approximately 27 million shoplifters in the United States today, and according to the National Retail Federation and the University of Florida, shoplifting, employee/vendor fraud or administrative errors cost retailers $44 billion last year. Some things you can do to minimize the occurrences in your store are to properly train your staff, conduct stringent pre-screening for potential employees, install security cameras, structure the store’s layout in an open manner so there are as few blind spots as possible, and put locks on especially expensive items, requiring a sales associate to assist anyone wanting to purchase those pricey goods.
- Be fluent in the different types of loss. Today, loss doesn’t just mean stolen goods or finances. As more and more retailers adopt omni-channel strategies, they need to take steps to ensure the privacy and safety of the data and digital information they collect from their customers. Make sure that you have an IT vendor or internal employee that can check all point-of-sale (POS) systems for accuracy and security, and to make sure that all parts of the system work with each other to correctly complete a sale without comprising customer data.
- Always be on the hunt for new customers. Keep your store clean and well-lit and make sure your employees are friendly, professional, and helpful. They should also be knowledgeable about your products. An employee not knowing how to answer a customer’s question can be the difference between closing the sale or losing it. Open communication is also key. Check in with your staff on a regular basis to see if they have questions and make sure things are running smoothly. If you are a small business that can’t afford TV advertising, then explore other advertising options, such as flyers, mailers with coupons, newspaper ads and social media – which is a free option! Get the word out about your business and why it’s so great. Figure out what differentiates you from the rest and clearly communicate that message in all of your sales materials. Tuck coupons in shoppers’ bags and take advantage of the in-person point-of-sale to keep them coming back for more.
- Get to know your suppliers. Small businesses should do their due diligence when choosing suppliers. Read reviews from other SMBs who have used them in the past. Are they consistently on time and accurate? Would a colleague recommend them? Also, be sure your vendor policy is well-defined ahead of time. Require packing slips with each delivery and evaluate deliveries yourself to ensure you receive the correct quantity with each order, and there are no damaged goods. Double-check your invoices to make sure the numbers are accurate and keep detailed records in multiple places.
- Think through your long-term strategy. Track your business’ growth each month to be certain you are on track to accomplish your long-term goals. Is there a certain sales revenue you need to hit by the end of the year? Where do you see yourself five years from now? Planning ahead and tracking your progress every step of the way is vital to your business’ long-term success. With a holistic view of your business operations and by continually re-assessing your plan, you will be able to more easily identify holes. Catching problems as soon as they arise and re-working your strategy will save you time, money, and lots of frustration.
- Cut costs where you can. Any unnecessary spending you are able to cut, instantly turns into a bottom line improvement for the business. You can buy recycled printer cartridges, and used computer equipment, copiers and office furniture to save money. When looking for insurance, check with your trade association first; many offer competitive group insurance. You may also be able to join with other similar businesses to secure bulk purchasing discounts.
- Case your inventory. Are you a small restaurant, deli, or business that sells perishable goods? Any dated items that are not sold or used are thrown away or destroyed, cutting into profits. Monitor your inventory as well as the items going out the door to make sure you aren’t spending your money on either too much inventory or items that don’t leave the shelves. This waste can build up over time.
The big takeaway for small businesses is to be proactive in all of these areas. Don’t just sit back and wait for something to go wrong, thinking you’ll cross that bridge when you come to it. There are many advantages to being a small business and if you implement these steps into your processes and company culture you will be successful.