Additional Security for Your Small Business

Security measures to prevent retail loss are essential regardless of your business size. If you manage a small business, you must prioritize securing your establishment because a minor retail loss may cause a huge setback in your profit. You must protect and keep track of various things in your company or establishment. Modern technology and security systems nowadays can be a lot of help.

Many people are starting to go out and shop leisurely again as we slowly gain herd immunity from the COVID-19 virus. You will need to take steps to secure your business from possible retail loss, most commonly caused by organized retail crime, internal theft, or return fraud. You can avoid retail loss by implementing efficient and effective security and surveillance systems. Training or educating your employees, especially about protocols in the business place, also serves as another protective layer for your business. Investing in state-of-the-art AI or remotely powered surveillance systems is also wise.

Learn more about the security myths for small businesses and how you can disprove them for the benefit of your business.

Myth 1: Retail Loss is Mainly Due to Theft

Retail loss or retail shrinkage has multiple causes—including, but not limited to, theft. As a small business owner, you must be wary of cybercriminals if you have an online shop and small-time or organized shoplifting crimes if you have a physical store.

The risk of retail loss or shrinkage has become a priority for retailers, as it does have a lasting impact over time. According to the 2020 National Retail Security Survey, 60% of retailers prioritize retail loss prevention for organized retail crime (such as shoplifting and cargo theft). In comparison, internal theft and return fraud have also become a priority for 58% and 53% of retailers.

Other causes of retail loss include:

-Shoplifting or theft

-Internal theft

-Return fraud

-Vendor fraud

-Administrative errors/Unattributed losses


Shoplifting can manifest itself in different ways. The criminal may be working individually or have a whole group organizing their crime. They can take items ranging from $1 to $1,000 and either do it once or strike intermittently. This information probably explains why it is considered the number one or sole reason for Retail Loss.

Internal Theft

Internal theft, or employee theft, makes up 90% of retail losses according to a 2016 study. Employee theft can manifest as outright theft of goods, ringing up false or nonexistent returns, and issuing fraudulent gift cards. It can also be evident in abusing employee discounts or special treatment to friends or relatives (giving them discounts or not scanning their items). You may not want to think about it, but your employees may sometimes also take small amounts from the cash drawer over time. Inside jobs, small or large, cost businesses $50 billion annually and cause one in three bankruptcies.

Return Fraud

Return fraud is another cause of retail loss commonly treated with neglect. It can be difficult to tell if someone is committing return fraud. You wouldn’t know if people are returning stolen or used items and items bought with counterfeit money. Some people use fake receipts to return the things they got from your store or return items they have already exchanged.

Vendor Fraud

Vendor fraud occurs in various ways. A hacker may manipulate a business’s accounts payable system to extract money illegally. A vendor or supplier may create false receipts or documents to steal money from a company through their transactions over time. A group of employees may work together to skim cash from your business accounts before closing them out. An employee may steal business checks to deposit money into their account. Simply put, vendor fraud is any act of theft from the end of your supplier(s) or business partner(s).

Vendor fraud most commonly occurs in businesses lacking strong security measures. Usually, these are small- and medium-sized enterprises. Small companies depend on a small group of employees who manage the business's financial transactions. Sometimes the budget cannot support an excellent checks-and-balances framework, or small business owners do not prioritize dealing with vendor fraud, which is why small businesses are at the most risk to experience this.

Administrative Errors and Unattributed Losses

Lastly, we have administrative errors and unattributed losses to prove that theft is not the only cause of retail loss.

Administrative and paperwork errors may seem too small an act to impact retail profit, but they still make up almost 20% of yearly retail loss or shrinkage. The term “paper shrink” (when there are inconsistencies in a business’s inventory, not due to theft or fraud) would apply, though nowadays, most information and merchandise checklists are in a database.

Administrative and paperwork errors cause retail loss or shrinkage when there are mistakes in labels, markdowns, and accounting. Such mistakes cause items or merchandise to be sold for less than their supposed price or refunded for more than their original price.

Also, a side effect of administrative errors is unattributed losses. Unattributed losses are peculiar and are the most frustrating kind of paper shrink because you have no idea where your items, merchandise, or sales went.

Myth 2: COVID-19 Has Limited Theft

It is true that during the pandemic, there was a decrease in crime. People were required to stay home and practice social distancing to avoid catching the virus. Employees were either laid off or had to work remotely. You might believe that your security has been boosted after the adjustment that businesses had to undergo during the pandemic. Are you sure you focused on the correct security measures?

Now that we are returning to typical business transactions, you may need to re-hire staff and incorporate protocols that address the safety and security of your establishment. Sure, health protocols are well intact, but now that many people will begin entering stores again, you must ramp up your security protocols. Face masks have made it harder to identify criminals, so protection such as video surveillance, access control, and intrusion detection of excellent quality are essential to your business.

Myth 3: A Small Staff Makes It Harder to Monitor the Business Establishment

Owning a small business does not mean you have to tolerate retail losses with the excuse of having only a few employees to keep watch around the clock.

It is more common to report a theft after the act than to have staff apprehend the criminal on site to minimize risks and liabilities. Most retailers rely on loss prevention when it comes to theft. Loss prevention pertains to security measures you put in place to avoid retail loss.

You can take advantage of quality video surveillance nowadays that can be surveilled remotely 24/7 by offshore staff. These surveillance services monitor your establishment at all times, immediately alerting you of any suspicious events and verifying criminal acts to the police, which guarantees a quick response.

Myth 4: Our Current Surveillance Systems and Staff Training Are Enough

You may have had surveillance systems in your establishment for the longest time, but there is always room for improvement, especially on these gadgets. Technology is evolving—people develop life-changing inventions as time goes by. There are now AI, remote administration, and cloud-based video solutions that aid in securing your establishment more efficiently and are an excellent investment in the long run.

Retail Loss Prevention

Now that you know the common security myths for small businesses, here are some things you can do for retail loss prevention.

H3. For Shoplifting

Having obvious signs that declare your store is under surveillance can effectively help reduce theft. Place these signs where they are easily seen, such as the entrance and the cashier.

Make sure you organize your store, take time to think about your store’s layout, and that areas are well-lit. Organization in your store helps you keep stock of your items, have them in order, and quickly check the displays if you feel something is missing. If you have expensive items on hand, you can keep them in a locked display cabinet or something similar.

Train your employees to offer excellent customer service. Encourage your employees to move around and make their presence known. Maybe not to the point that the customer becomes uncomfortable, however, knowing that there are always employees in the vicinity can help deter any criminal activity.

For Employee Theft

The most apparent recourse to discourage employee theft is to place surveillance cameras in employee areas, check their bags when entering and leaving the premises, and have signs to remind them that they are also being monitored. Coming off as threatening doesn’t boost morale and may create a hostile work environment. Read on for other options you can consider to prevent employee theft.

Create an effective hiring process. Ensure that you are hiring employees with integrity and values that align with yours. Your employees are not just people you train and boss around—they are also your business partners because they can help you improve your sales and avoid retail loss in your establishment.

Regarding training, you must take time to brief your employees on your establishment’s protocols. Educate them on how to avoid errors and prevent losses, distinguish fraud, spot shoplifters, and verify these events with the police.

You should also maintain a positive work environment and develop a good culture. Staff morale is essential to the success of your business because if they are happy, they respect their job and your business. Your employees may show loyalty; thus, employee theft and fraud will be lessened and eventually eradicated.

For Return Fraud

The most common security system for returns is asking for a receipt. You should issue receipts to your customers, so they have a valid receipt to present when they wish to return an item. If the customer does not have a valid receipt, they can receive store credit or exchange the item for another same-priced item. Ensure that your employees follow this protocol every time.

Another thing to include in your employee training is distinguishing when a customer is committing return fraud. Employees should watch out for swapped price tags, wardrobing (or “free renting”), returning a similar item of less value from a different place, or returning stolen items for a full refund.

Your establishment should require a valid ID from customers returning or exchanging items. An ID database will help you keep track of these transactions and refer to them once a customer is suspected of return fraud.

For Vendor Fraud

Vendors or suppliers must be reliable and trustworthy. Always do a background check on your vendors (if they have had fines or lawsuits in the past) to ensure you are doing business with a reputable supplier. Some ways to do background checks may include checking their social media or reviews online, recording verification, and seeing if their employees have a criminal history.

Create a safe space for employees to report fraud. Having outlets where employees can report fraud anonymously may help prevent fraud in your business.

Assign a specific employee for different tasks. For example, one can monitor invoices, and another can monitor inventory.

For Administrative Errors and Unattributed Losses

You should also include the following in your employee training: proper price tagging, accurate inventory inspection, and return process protocols. As usual, excellent employee training and discipline aids in retail loss prevention.

Instead of doing complete inventory counts, which take up a lot of time, your employees can practice doing cycle counts. Cycle counts are also known as partial inventory counts, where your staff audits inventory for one category at a time. Auditing part of your inventory can help you spot retail loss or shrinkage and address it immediately to find its cause and prevent it in the future.


Retail loss is not only caused by theft or shoplifting but also by internal theft, return fraud, vendor fraud, administrative errors, and other unattributed losses. Even if you already have decent surveillance systems in your establishment, you must update them once in a while to get the best protection, especially for your small business. Keeping your store organized and well-lit also helps you monitor different areas easily.

Knowing about retail loss prevention is more than preventing theft and profit loss—it’s about maintaining safety and security within your establishment for you and your staff. It instills discipline among your employees that carries over to your customers, who, in turn, learn to respect your establishment.

Having disproved the common security myths for small businesses and working toward developing an effective and efficient security system within your establishment results in better profit and relationships with your customers and employees in the long run.