A Blog for Small Business Owners & Operators

4 Common Errors Causing You Loss

Posted by LP Innovations

Aug 31, 2010 12:57:00 PM

A dictionary would define an error as something incorrectly done or a mistake. In business, an error can be defined as a contributor to loss. Understanding that not all losses are theft-related, here are four of the most common errors we have found when working with retailers and businesses. 

1. No written or updated policies and procedures.

Fact: Most errors are caused by the actions of your employees.

Reality: How can an employee be in a position to prevent errors if the company does not provide adequate instructions on how to handle business processes?

The lack of written policies and procedures, along with edits or updates will most certainly create an environment of “I didn’t know what to do?” Written policies provide the employee with the ability to reference what should be done. Don’t rely on verbal training – put it in writing.

Learn about 4 key loss prevention policies here.

2. Miscounting Merchandise and Goods

Fact: Counting is as simple as 1, 2, 3…

Reality: Miscounting easily occurs throughout your business enterprise from the initial receipt of merchandise (shipment, deliveries) through inventories, transaction handling and everything in between.

Employees should understand that it is not how describe the imagequickly they complete a task, but how accurate the task is completed. Whether it be counting merchandise, preparing deposits or conducting any business activity, accuracy is more important than speed. 

3. Damages and Waste

Fact: Damages are one of the most controllable errors in your business.

Reality: They can be more damaging to your cost of goods sold than theft!

Once you own the inventory, proper care of that inventory belongs to your team. In the event an item is damaged you will suffer either its complete value or a fraction of its value, depending on the cause and your vendor relationship. More often than not, the value is a loss. This loss will immediately affect your costs of goods sold (lost inventory) and your bottom line.

For those dealing with food and perishables, waste too is an immediate loss and increase to your costs. Handle inventory and product safely and accordingly – even the small stuff will add up!

4. Handling Point of Sale Transactions

Fact: A sale isn’t a sale until the money is in the bank!

Reality: Register errors can cost you in inventory and fees.

Errors involving the point of sale (register) will cause loss. These errors can be found in many transactions including check or credit card acceptance, deposit preparation or change back to customers. Handling voids, refunds, discounts and other sale transactions will cause errors that result in inventory, monetary or margin losses. Others may not cause inventory loss but increased bank or credit card fees, reduced margins or “paper” shortages.

Knowing how errors occur in your business will most certainly help you to guard against them. One thing to remember is that errors can happen anytime and employees should be reminded constantly on how to prevent them and if they occur, quickly correct them.

Interested in some ideas on generating employee awareness? Get FREE Ideas via our online Awareness Presentation!

Topics: loss prevention awareness, loss prevention