Business Theft Statistics
The unfortunate reality for business owners is that employee theft costs businesses $50 billion every year. Add in shoplifting, which costs retail businesses more than $13 billion dollars a year, and fraudulent transactions, which cost businesses 1.58% of their revenue in 2017, and there’s a lot of avenues for profit loss to contend with. Furthermore, almost 9% of small businesses were burglarized in 2016, adding an additional layer of potential loss to deal with. Robberies account for many business losses in the United States each year, too. In 2019, 11% of the country’s 267,000 robberies occurred at businesses such as convenience stores, gas stations and banks.
Internal Theft vs. External Theft
Theft comes in many forms, from shoplifting to burglary to employee embezzlement. At its most basic level, there are two types of theft that occur in businesses: external theft, which is theft by people who aren’t part of your business, such as customers, burglars or robbers, and internal theft from within by your business by employees or partners.
Some common types of external theft include:
- Burglary: Burglars break into your place of business during off-hours and steal products or money.
- Robbery: Robbers come into your place of business and threaten you, often with strong-arm tactics, intimidation or a weapon, and demand money or merchandise.
- Shoplifting: Shoplifters sneak merchandise out of stores without paying.
- Fraudulent returns: Scammers often concoct elaborate schemes to return merchandise for refunds when, in fact, they never bought the item in the first place.
Common types of internal theft include:
- Skimming: Skimming happens when employees take all or part of the money from a sale and keep it for themselves.
- Embezzlement: Embezzlement often occurs in non-retail businesses, when someone in charge of financial transactions has misappropriated or redirected funds for their own gain.
- Shoplifting: Employees sometimes shoplift items from stores, taking them home without paying.
- Stealing from the till: Employees who operate cash registers can steal money from the till and pocket it.
- Padding hours: Employees who work hourly might lie about the hours worked to take home more money than they’ve earned.
- Data theft: Employees who have access to company secrets or sensitive data might steal that data and use it to perpetrate fraud or sell it to scammers.
These are just a few of the most common types of theft that can occur in your business. It’s up to you to take measures to prevent such theft and keep your business profitable.
Tips for Preventing Theft From Internal and External Parties
There is plenty you can do to protect your business from all kinds of theft. Some of the things you can put into practice right away to prevent theft include:
- Provide great customer service. Make sure guests in your business are greeted and offered help. Not only will this make sure every customer gets what they need, but it will also deter shoplifters.
- Install a camera system. If you can see all parts of your business and keep a record of the activity in your business, you’ll be better protected from all sorts of workplace crime.
- Keep track of inventory and investigate discrepancies. This will help you deter employee theft and gain an understanding of how much external shoplifting is happening.
- Be security conscious with deposits and cash registers. Make bank deposits during the day, vary the times and routes you take to the bank, and reconcile cash registers after closing with the doors locked.
- Require receipts for returns. Some businesses are loose with their return policy. At the very least, you should require valid receipts for returns.
- Check references when hiring. Background and reference checks will go a long way toward making sure your staff is trustworthy.
- Encourage the buddy system. Rather than leaving employees alone, make sure at least two are at work together. This not only helps prevent employee theft, it protects your employees as well.
- Be clear about theft policies. Let employees know what your policy around theft is, and quickly handle any problems.
- Install a security system. A security system is the number one defense mechanism against burglary, robbery and even shoplifting, as well as employee theft. Make sure your business is well equipped from the start.
Internal and external theft combine to cost businesses billions each year. For this reason, theft prevention is crucial to the financial health of your business. Use some of the above tips on how to prevent theft in your business and be sure to include a good security system and a robust set of security cameras. If you’re diligent, you can cut down or cut out business theft altogether, helping you to stay in the black.