This Episode: Curbing Retail Theft, Fraud, And Other Things That Piss You Off
Theft and fraud are a reality. As a retailer, you just need to recognize it and be upfront about it. Sometimes it’s painful. But, instead of getting angry you can acknowledge these business realities and deal with them by thinking critically and learning the lesson.
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Hey. It’s Bob Negen and welcome to yet another episode of Real Retail TV. Today we’re going to talk about curbing theft, fraud, and other things that piss you off. Theft and fraud are a reality. We just need to recognize it and be upfront about it.
Your vendors, some of them, not all of them, will steal from you if they can. Your employees, some of them, not all of them, will steal from you if they can. Your customers, some of them, not all of them, will steal from you if they can. Friends and family will steal from you, not all of them, will steal from you if they can. And it’s hurtful. Sometimes it’s painful. But you are a business person and part of being a business person is dealing with reality the way that it is, critical thinking.
So once we acknowledge that it’s real, we can begin to deal with it. And the first thing we need to talk about is dealing with it emotionally, because it is hurtful. It can be painful. Sometimes it’s devastating. Someone you know or love or trust, a longtime friend or a family member, devastating, So let’s talk about thinking about it. So I have an acronym. It’s called BAM. Breathe is what the B stands for. A is acknowledge. Acknowledge that you’re hurt. Acknowledge that it’s painful. Acknowledge your shock. And then M stands for move on. But in this context of BAM, breathing, knowledge, move on, I also want to add another thing and that is learn the lesson.
There is always a lesson to be learned from painful situations and you can’t just move on if you’re going to get the most from this situation. You have to learn the lesson. So here are the lessons that I learned from my experiences with fraud and theft and other things that pissed me off. The first thing is that it’s just business. I learned this from one of the wisest businessmen I ever met. Whenever I would get upset, whenever I would become overly emotional, he would just shrug his shoulders and say, it’s just business.
And it’s true, isn’t it? It’s just business. It’s a lesson to be learned. And the reason that you have to move on is because someone stole something from you. Usually it’s money. Sometimes is goods, but usually, it’s money. Goods represents money, right? But once they stole from you, you learn your lesson and you move on. Because the longer it stays with you, the longer they let you let them occupy the space in your head, the more they’re stealing from you, right? They’re stealing your time. They’re stealing your mental energy. They’re stealing the focus you could be putting towards building a better business. They’re stealing the love you could be giving to your friends and family. They are taking more than they’ve already taken, which is why you need to breathe, acknowledge, learn your lessons, and move on.
So these are some nuts and bolts, things that you should do every single time something like this happens. So the first thing that I’m going to suggest is that you should change your locks every time someone who has a key quits. Every time. Whether they leave on good terms or bad terms, change your locks. You change your locks because someone who has a key, even though you trust them, may come back and steal from you.
I remember someone talking about someone who worked for us and they said, oh yeah, Corey who worked for you last year, he’s selling kites out in the back of his car all the time. He’s got lots of kites. Well this is before I learned to change my locks. And guess what? Whenever Cory was low on stock, he came into my store and took more in the middle of night. So everybody in the town next to us had great kites. They didn’t buy them for us we were paying for them, but they weren’t buying them from us. So you want to change your locks whenever anybody quits. Yes, it’s expensive. But it’s worth it. It also protects the innocent, right? So even if your brother quits, you change the locks.
When I sold my share of the Mackinaw Kite Company to my brother Steve, he changed the locks. He’s protecting the innocent. You see, because when the locks have been changed, anybody who doesn’t work there anymore is not a suspect. That make sense? Change your locks always. You with me? Good. Change your passwords. Passwords can create a lot of mischief. And finally, create a checklist so that whenever somebody quits you do this, this, this and this so you know what to do and it’s done every single time. This is important. This is part of being tight. This is part of being competent. This is part of being professional. So there mindset. There’s that sort of nuts and bolts piece, but there’s also prevention.
So what you want to do is you want to give your attention to opportunities to steal opportunities to create fraud and then diminish those opportunities. I believe that most people are honest. But some people sit on the fence. Honesty is a sliding scale. And if your tight, if you’re competent, if you have systems in place, that people who are in that gray area are a lot less likely to steal from you than if it’s easy to steal from you.
So you want to put attention to prevention. You want to trust your employees, but you want to verify that they are indeed being honest. The first thing is you want to count your bank down twice a day you want your bank to rec out whatever that number is, whether it’s $200. Whatever the number that your cash drawer should be, it should be that at the end of the day and it should be recounted before the store is opened. Why? Because if you don’t do it twice a day, you’re never going to be able to check. You’re never going to be able to investigate.
Let me tell you a story. We have a client who has several ice cream stores. And she always counted her bank down and made a deposit at the end of the night, but never again first thing in the morning. After she heard me give this piece of advice, she started to count down her bank in the morning. She came to me and said, Bob, guess what? I found out that someone has been stealing $20 from each of my stores every morning. So this woman had ice cream stores and this person was delivering ice cream to her stores before the stores opened and every day. He would drop off the ice cream and take a 20, drop off the ice cream, and take a 20. And she would have never found that if she hadn’t started counting down her drawers at the end of the day. Excuse me. You also should be very, very insistent that at the end of every day your bank recs out to zero.
Of course, it’s not going to happen every single time every single day. But if you have a problem, if your bank is regularly off, you’re going to want to start to cash out drawers in the middle of day. Count them down. Find out. Start doing some investigation. You’re going to want to cash out drawers in the middle of day. Find out who’s accurate. Who’s not. Again attention stops prevention. If people know you’re watching, they’re going to be a lot less likely to steal from you. You also want to check your transactions for suspicion voids and returns. Back in my day, we would look at the register tape. Now you can scroll through whatever happens on your camera. I mean, on your POS system. But it should be part of a managerial or owner’s open and closing checklist that you take a look at how many voids and how many returns are happening. And if somebody has too many, start to investigate.
Attention equals prevention. Video cameras, again, you position it as it’s for everyone’s good and for everyone’s safety. But attention equals prevention. The final thing I want to share with you is another great piece of advice from one of my mentors, Tom Williams. The, “it’s just business” guy I mentioned earlier. So when I met Tom he owned 17 different businesses. And in the course of one of our conversations, he shared how he stayed on top of, in touch with all of his businesses. And I’m sharing it with you here because it’s awesome. Tom had all the mail from all of his companies come to his office in Grand Rapids. And Tom opened every piece of mail from all of his companies. He opened all the bills. He just opened everything, right? Because the mail is information. I can’t tell you how many stories I’ve heard of people being embezzled from just because they never saw what was going on. So he got to see what was happening in his business by opening all the mail, all the bills, all the notifications, everything. Every piece of mail he opened. The other thing that he did was he signed every purchase order over a certain amount of dollars. I don’t remember what it was. So all of the money that was going out, he saw it. Again, he was keeping his finger on the pulse of the business. And the third thing that he did was he signed every check. And he said, Bob, I’ve had Vise Presidents of Finances, CFOs, and I’ve done all of these things, but he said, by doing these three things, opening the mail, signing all the purchase orders, and signing all the checks, I really know what’s going on. I have a really good idea of what’s working, what’s not. I anticipate problems. I see opportunities. It’s allowed me to have a deeper understanding of my business that no computer program could ever give me.
Your action items should you choose to accept them. First and foremost, count down your bank morning and night. Secondly, start to really get focused on making sure that your bank recs out to zero every single night. This is not only attention equals prevention strategy, but it’s also an indication of your professionalism, your competence. You know, it took me years to get it to where my bank rec’d out every single night. And it was a source of pride for me and for my team.
Again, it’s handling the money. Attention equals prevention. And finally, just make the recognition that even the people you know and like and trust may be stealing from you. So don’t fall into the trap of saying, oh, we grew up together. Oh, we’re related. Oh, they’ve been working for us for years. It’s just one of those hard to swallow truths. But again, you want to be a better business person, you have to face the truth where it is. You have to be a critical thinker. So attention equals prevention. Keep that money in your pocket.
If you haven’t joined our Facebook community yet, I would encourage you to go to Facebook look up Whiz Bang Retailers and join. It’s a great community filled with progressive growth-minded retailers. You’ll really, really like what goes on there. So I’m Bob Negen. Thank you for watching Real Retail TV and I’ll see you next time.