Instituting the proper workplace security measures and planning for disasters coupled with the right insurance coverage, are vital components in minimizing the risks to your business.
Running a business means you learn to expect the unexpected. However, when events that are totally out of the ordinary course of business occur, if you don't have a plan in place, the resulting damage to your business can be catastrophic. We're talking about floods, hurricanes, earthquakes. Robbery, forgery, computer piracy. It's a fact of life that Mother Nature sometimes strikes, accidents happen, and some people steal things.
No doubt you're thinking "I can't control the weather or other people's behavior." True, but what you can and must do is take steps to minimize these sorts of risks to your business. How? Well, in addition to obtaining the proper types and amounts of insurance for your business and your assets, you should consider:
Crimes against people and crimes against property can significantly add to your cost of doing business for many types of small businesses. Shoplifting and theft of business property are all too common and costly. Crimes against business owners, employees, customers, and others who enter the premises are less common, but can be more tragic and traumatic when they occur.
While you'll never be completely free from the effects of crimes against your business, there are decisions that you can make about your facility that can lessen the likelihood and impact of crime on your business. Primarily, these decisions concern facility location and building security.
Site selection. Where you decide to locate the facility can have a great effect on the security needs of your business. If you locate in a high-crime area, you'll likely need to invest in more facility security features than if you locate in a low-crime area. This could lead a prospective business owner to say, "So I'll only think about putting my facility in the most crime-free area that I can find." However, remember that higher-crime areas are usually significantly cheaper in terms of rent, and if you can save 60 percent of the cost of your rent, you can buy a very nice security system and still come out ahead.
Another consideration is that higher-crime areas are often under served in terms of retailers and other businesses. Some small business owners have found they can make a good living by accepting the risks of a operating in a particular neighborhood where there's little or no competition.
Building security features. What kind of security features you'll need will depend on what kind of business you operate, and on how severe you think the crime threat to be. Common building security features include:
Consider timers that turn lights on at certain intervals to keep thieves guessing as to whether or not anyone is in your place of business.
You may also want to have motion-sensitive lighting installed near doors and windows. It serves a dual purpose; when thieves approach your building, lights may surprise and deter them, and when you or your employees approach in the dark, it lights your way and makes your entry safer.
Depending on the severity of security threats your business faces, you may find it advisable to augment your workplace security features by using security guards. You can either employ such guards directly, or contract with private security service companies for them. Although you can have a guard stationed at the site around the clock, most small businesses that use security services opt for a guard that periodically checks the facility after hours. Leaving trained guard dogs to roam the locked facility after closing is another alternative.
Before you decide to use security guards on your business premises, ask your insurance agent about how this affects your liability coverage. You should be particularly careful about this if your guards will be armed, or if you will be using unattended guard dogs. The last thing you want is to end up paying a legal judgment to a burglar!
Locks and key control may seem like an obvious way to increase security, but you'd surprised to know that many business owners don't take full advantage of this type of security measure. The use of dead bolt locks, where appropriate, and the use of double cylinder dead locks, requiring that a key be used to open the door from either side, can go a long way in discouraging burglary of tempting theft targets. But locks don't help if you don't remember to use them!
Be sure all doors and windows have locks and that those locks are sturdy and, above all, used. Get into the habit of checking all the doors and windows before you lock up and leave for the night. Don't assume that because a door was locked yesterday — and because you didn't see anyone use the door — it is still locked. Be safe rather than sorry.
As an additional bonus, an adequately locked-up facility may make you eligible for discounts from your insurer.
After proper locks are installed, key control is also essential to making sure that the property remains secure. To make sure keys don't fall into the wrong hands:
Remember, too, that locks aren't just for doors. There are window locks, desk locks, file cabinet locks, and even computer hard drive locks. Make sure you have keys and key control for all of them.
As part of your security program, you may choose to write up your security rules and give them to your employees. You may want to include your security rules in your employee handbook, if you have one.
Security is a broad issue, and you may choose to keep the focus of your policy narrow, or you may choose to address many different aspects of security in your policy. What are some of the topics that you might include? Consider including the following:
Embezzlement or employee theft, is an equal opportunity problem for businesses of all sizes. The best way to prevent embezzlement is to recognize the warning signs that it's taking place and implementing an internal system of controls.
Embezzlement has been defined as "the fraudulent appropriation of property by a person to whom it has been entrusted." This is a fancy way of describing your employees stealing from you. Embezzlement doesn't happen only to bigger money-making businesses that you read about in the news. It happens every day to the small business owner. Small businesses are also less likely to take the precautions necessary to prevent embezzlement. Unfortunately, it's a fact that small businesses can't afford to ignore.
What can you do about this very real problem? The best ways to combat embezzlement are by recognizing the warning signs, establishing internal audit controls, and perhaps bonding employees where appropriate.
The following are some warning signs that embezzlement may be taking place in your business:
If you suspect there's a problem with employee theft (better yet, before it occurs!), there are basic actions that you can take in implementing an internal system of controls, including the following:
Creating an environment that discourages dishonesty. While there is no foolproof system of accounting or internal control that will absolutely prevent employee dishonesty losses, an environment can be created where employee pilfering is discouraged.
The first step is to review every area where potential dishonesty problems could arise, including:
The next step would entail setting the mechanisms in place to remove the temptations that could make an otherwise honest employee dishonest.
In setting up an internal audit system, it's common procedurally for most companies to divide financial responsibilities and functions so that no one employee controls all aspects of a transaction. To expand on the idea of requiring two signatures on a check, insurers and consultants recommend the following:
Taking inventory and outside audits. Dividing financial responsibilities and functions is not enough, though. Take an inventory of your merchandise at least annually and have an outside public accountant audit your cash and accounts annually.
An employee who never takes a vacation could be concealing acts of dishonesty. All employees, but especially the ones who have access to your business records, should be required to take some time-off.
Even if you have an internal auditing system that makes embezzlement difficult, the danger of collusion still exists. Consequently, some companies protect themselves from employee dishonesty by bonding their employees.
Bonding is the process by which an employer can be indemnified for the loss of money or other property sustained through dishonest acts of a "bonded" employee. It can cover many types of fraudulent or dishonest acts committed by an employee, alone or in collusion with others, including:
It seems lately that natural disasters are occurring with more frequency and intensity. In the past few years, in particular, floods, earthquakes, fires, mudslides, tornadoes, and hurricanes have caused millions of dollars in damages to the homes and businesses they strike. While you can't prevent a natural disaster from occurring, you can help minimize its impact on your business by being prepared if disaster strikes. In order to be prepared, you need to develop a contingency plan in case of an emergency, as well as emergency procedures.
Think you don't need to worry? Ask yourself — can all or part of your work site cease to exist for one day or permanently? Would you survive the financial disaster? If the answer is probably not, it underscores how important fire, disaster recovery, and contingency planning are. The following sample plans assume that all or a part of your business has ceased to exist in the location it is in for a period of time. How you continue and recreate your business are the goals of these plans.
If you have trouble getting motivated to do it, think of how much better shape your business will be in if you do. After a disaster occurs, you may be the only business of your kind standing and ready to go. Think of how much business you could do!
Each business's plan is unique, yet the process of developing the plan has many similarities. To help prepare for a disaster you should develop a contingency plan and emergency procedures.
Think of your contingency plan as a fire drill. While you may never have a fire, it's good to know what to do if there is one. Approach general contingency planning the same way. Use these steps to get started:
If you have any employees, post instructions in the work areas concerning what to do in case of a fire, earthquake, or other disaster and make sure that your employees are familiar with those instructions. You may want to conduct drills to reinforce the instructions.
The Business Tools area has some samples of warnings and instructions that you can use to create your own emergency procedures for posting or distribution to employees.
Even the best laid plans should have provisions for when all else fails. The most important thing to remember is that you don't have to go through the recovery process alone (even though it may feel like that to you at the time).
In addition to various state and local economic development programs, the federal government offers relief to disaster victims, including small business owners, through various sources. Be sure to consult the Small Business Administration's (SBA) excellent disaster assistance office.