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Business Planning Process Planning & Strategy

5 Steps to Loss-Prevention for New Entrepreneurs

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The money you save buys as much as the money you earn. In a business context, this means that preventing avoidable losses is as important as winning income. With that in mind, here is a quick guide to loss-prevention for new entrepreneurs.

You Need to Know What You Have

Your first task is to identify your assets. Most SMBs will have a combination of physical assets and digital assets. Physical assets can generally be divided into technology (including IT equipment), tools, and materials. Digital assets can generally be divided into personal data and commercial intellectual property and software.

You must have a complete and accurate inventory of these assets. Compiling this inventory can also be an opportunity to think about how you would identify your assets if they were lost/stolen. Some assets come with identification numbers e.g. IMEI numbers. Others do not but could potentially be marked or tagged in some way.

Particularly valuable assets, such as personal data, should ideally be given a specified custodian. It will be (part of) their job to keep track of it and hence keep it safe.

You Need Processes to Track What You Have

Your initial inventory is definitely not a “set-and-forget” list. There are going to be changes to it and those changes need to be tracked. What’s more, they need to be tracked promptly no matter how busy you are. This means that you need to find a solution that makes it easy for your team to do what you want them to do.h

For smaller businesses, an inventory solution can be both low-cost and low-tech. In fact, it could be something as simple as a spreadsheet. Ideally, the spreadsheet would be in a cloud drive so it could be updated from a mobile device. Be aware, however, that these basic solutions will almost certainly need to be updated as your business grows.

You Need to Cross-Check Your Inventory with Other Data

You need to undertake regular “sanity checks” on your inventory data. Essentially, you’re looking to see if it correlates with your other business data. If the level of inventory movement seems excessive, then you need to investigate because you may have a problem.

If necessary, take a bit of time to calm down and clear your head before you start your investigation. Employee fraud certainly does happen. Human error, however, is far more common. If errors are happening often enough to be noticed, then it’s often a sign that you need to improve your processes. This may include upgrading your tools.

Investigate Processes Before You Investigate People

Firstly, check the processes themselves. Specifically, make sure that they reflect how your staff actually work right now. Sometimes this can be very different from how you thought they worked and/or how they worked in the past. Also, make sure that all staff actually know the process. Even if they have been trained on it, they may simply have forgotten.

If that doesn’t resolve the problem, check for issues with any tools you use. If you’re using software tools, there could be bugs in them. Alternatively, your staff may simply not understand how to use them properly. In fact, you may find that your inventory error was actually a data-entry error.

Only if you’ve ruled out both of these should you go on to investigating your staff. How far you go with this depends entirely on your judgment. In minor cases, just implementing periodic spot checks will be enough. In major cases, you may need serious resources like cell phone hackers for hire. If you’re going down this route, however, you may need proper legal advice.

Resolve, Learn and Prevent

Technically, these are three separate steps, but they really all flow on from each other. Resolving the situation means learning from the mistake that led to it. This should prevent the problem from occurring in the future. That said, the concept of prevention can have a much broader sense.

Ideally, you should be preventing problems by thinking ahead about what could cause them. Generally, the most effective way to do this is to keep tabs on everything which happens within your business. Then use this data to identify any emerging trends, for example, growth patterns. Supplement this with any relevant external data, although be careful to check this for accuracy.

Be aware that technology (including software) tends to become more affordable over time. This means that solutions that were once only available to enterprises are now accessible to SMBs. It’s therefore definitely worth keeping an eye on emerging technology to see if it could be a helpful option for your business further down the line.

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