Employee Theft

Business owners like to think that their employees are honest and care about the business almost as much as the owners do. Employee theft and dishonesty is only a problem for big business. However, the fact is that employee theft is a real issue for businesses of all sizes.
I learned this lesson at a young age in one of the businesses my father owned. For example, while in high school I worked in the marina that my dad and two other partners owned. I managed the retail part of the business, the pier as we called it, where we sold bait to fishermen, gasoline for boats, snacks, and a various other small items for people enjoying the lake. I hired some of my friends to work for me on the pier. I thought that it would be fun to work with some of my buddies. But, I soon discovered that they were stealing food and gas, and were cheating on time cards. I had to fire some kids that I thought were good friends — a tough lesson for a sixteen-year-old.
Some instances of employee theft can be small like the ones I experienced, but some can be quite significant even for a small business.
An article in the Arizona Republic highlights the challenges that entrepreneurs face with employee theft:

The 2006 report by the Association of Certified Fraud Examiners showed that businesses with fewer than 100 employees suffered a median of $190,000 in fraud losses. Without safeguards, any business is susceptible to fraud, especially common forms like check tampering, fraudulent billing and stealing money before it’s recorded.

The article goes on to list several tips to prevent problems from developing including the need to run background checks, the importance for the entrepreneur to sign all checks (I hand signed hundreds of checks every month in our business just to make sure I had the final review of all expenditures), and critical need to develop strong and consistent control systems even in a small business.
When it comes to employees and the finances of your business, remember the words of Ronald Reagan — “trust, but verify.”