How shops have seen an escalation in theft

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Fraud can easily run rampant in your shop if you’re not regularly watching out for it. And it’s a serious mistake to think you can trust everyone who works with you, industry experts said.

In just the last few years, shop coach Vic Tarasik has uncovered six-figure losses in some of his client shops due to theft.

The shop coach and owner of Shop Owner Coach observed during a recent webinar was that the frauds were allowed to happen because the shop owner delegated authority and didn’t attach any oversight.

He quoted former U.S. president Ronald Reagan who popularized the phrase, “trust but verify.” But Tarasik modified to “have a little bit of distrust of everybody.”

That may go against your personality or the way you like to do things, but you can’t blindly trust everyone you work with. Because $10 out of the till becomes $20 the next time — and keeps increasing.

Tarasik was in this position himself. When he ran a shop, the best man at his wedding was his manager. He gave him the company credit card and didn’t oversee what was being spent. He ended paying for the manager’s engagement ring, wedding cake, concert tickets and more.

“When I found out, and truthfully, the financial loss that I experienced was minor compared to the emotional impact — cost of relationship,” he said during the webinar, Taboo Topics. “You can’t put those things back together.”

He acknowledged that he left the door open for this to happen. “It could have stopped with me. If I would have been monitoring right out of the gate, would have caught it.”

Shop owners need to catch the small mistakes before they turn into big ones, Tarasik advised.

“I was told once: ‘If you don’t monitor something, you’re allowing it,’” said Judy Zimmerman, owner of Zimmerman Automotive in Pennsylvania. “In other words, if you don’t watch what’s happening, you’re allowing it to be abused.”

You have to be watching your financial statements, she urged. If you don’t, you’re allowing for nefarious actions.

And the frauds can extend beyond credit cards, cash or cheques. Zimmer told the story of how her jobber once stopped a potential fraud from taking place. They called her up and asked if she’d opened a new location on the other side of town. Puzzled, she said no. The jobber told her someone walked into their store wearing an employee t-shirt and ordered $700 worth of parts.

The jobber found that odd since the shop always places orders over the phone or online and it was for a different address.

Turns out, it was an ex-employee who had been fired but wasn’t asked to return the shirt.

“Fortunately, my vendor, since his red flags went up inside his head, he sensed something and made some phone calls. It saved [a situation that] could have been a whole lot worse.”