Physical theft or attacks on premises or stock are all too common and can be crippling for small businesses. But there are measures firms can take to help reduce their risk
of becoming the next victim, writes Jo Faragher.
Olivia Knight, founder of online group gifting platform Patchwork, believed that setting up her company in her local high street would help the business feel part of the community.
“There was an empty shop in our high street in Brockley, south London, so we decided to rent it as a studio,” she says. “People could see us working and would often pop in to ask us about the business – our door was open. I suppose we were lulled into a false sense of security.”
That calm was broken when, one day, two men stepped in and one of them grabbed a laptop. While Ms Knight was trying to fight him off, his accomplice wrenched another computer from her business partner and they both took off down the street. The company lost work and valuable data that had not yet been backed up, and discovered that its insurance would not cover the theft, so ended up crowdfunding to replace the lost equipment.
“We had deliberately set it up to be like a shop where people could pop in,” says Ms Knight. “Now our door is locked and you have to give a password to come in, and we have CCTV. When you start a business you plan for all the things that might be difficult, but you don’t factor in something like this.”
According to figures for 2014-15, the average cost of crime to a business is
just under £6,000, and the impact on smaller companies is often harder as they are less able to absorb the unexpected costs. A survey by FSB in 2016 found that two-thirds of respondents had been a victim of cyber crime in the preceding two years, while 48 per cent had experienced non-cyber crime.
Pushed for resources, many police forces no longer attend crimes in which the theft is worth under £200, and will only follow up if a suspect is identified – so many victims don’t bother reporting incidents. The same FSB survey found that almost a quarter of respondents (24 per cent) would not report crimes against their business, with most saying they did not feel it would lead to anything positive. Knowing that filing a claim for damaged or stolen property would push up their insurance premiums also put them off.
“A lot of attention is given to cyber crime but there is still a lot of physical crime happening to small businesses,” says Neil Sharpley, chair of the Ministry of Justice Policy Unit with responsibility for business crime at FSB. “What might be insignificant to a business such as Tesco may be a week’s profit for a small business or shop. FSB wants to persuade the police that all crimes are important.”
This is a belief shared by Adam Pritchard, Managing Director of e-commerce platform Shopit, whose premises have been burgled three times.
“We were renting a shared office in an old building and they smashed their way in and stole thousands of pounds’ worth of Apple Mac computers,” he says.
“This was before the days when we backed everything up to the cloud, so we lost a lot of design work and we had to phone clients to explain the delay.”
That first incident led Mr Pritchard to insist the landlord install CCTV, and he loaded a tracking app called Hidden onto the company laptops. When Shopit was burgled again, the suspect opened the stolen computer and it took a photo.
Once they logged onto a wireless network, the app shared their location. However, the police still weren’t interested. “We had a photo and an address but they still didn’t want to get involved, so we complained. They eventually checked the area and found a flat with the same colour wall as the photo. It turned out the person was handling stolen property, including ours.”
According to Paul Sweeting, technical and export director at security firm Bradbury, the best way to protect against physical crime is to step into a thief’s shoes. So much crime is opportunistic, he says, so businesses should consider how their premises look compared to those around them.
“Ensure your store or office looks the least vulnerable – security is largely about perception,” he says. “Make sure your premises are not the weakest-looking on the high street.”
He also advises owners to think holistically about security – a strong steel door will work better in conjunction with an alarm system, for example, while security requirements will be different for a building that opens onto a back alley and one that is on a well-lit high street. Make your security visible; even a fake alarm on the wall could be a deterrent.
One restaurant chain has gone a step further, going cashless – customers must pay by card or phone payment apps. Jonny Krantz is the owner of Bluebelles in Portobello Road, London, with another branch in Mill Hill and a soon-to-be-third restaurant in Essex. “When thieves steal money, we’ve already paid the VAT on it so it’s more than the cash value,” he says.
“It’s not just about what’s been taken or damaged. We lost a day’s takings when a burglar threw milk everywhere and short-circuited the electrics. We couldn’t open on our busiest day, and we had to pay for the repair and a new door.”
He argues that, if a thief is looking for cash and there isn’t any, they are more likely to leave. “Stealing cash is easy, so it’s generally what thieves look for,” he adds. “They could try to steal machinery but it might require more than one person, and they have to sell it to make money, so it’s not worth while.”
It’s also worth noting that the number of ‘theft by employee’ incidences in 2017/18 was 10,466, according to police statistics. In retail, this may show itself as shoplifting, but in the corporate world, theft by current or ex-employees can manifest itself in many ways.
According to research by audit and risk company Crowe, small businesses lose around £38 million per year through procurement or payroll fraud – which might include supplying false invoices, diverting payments meant for legitimate suppliers, or even adding ghost employees to the payroll. Employees misusing company credit cards or filing fraudulent expense claims also cost businesses millions every year.
“We don’t like to think that someone we work with is doing something they shouldn’t,” says Jim Gee, Crowe’s National Head of Forensic Services.
“We also now outsource a lot of work to external companies and have extended supply chains, so it’s not just the people we work with internally.” Supporting the ‘honest majority’ to speak up if they see something suspicious can stop thieves, he adds, but doing exhaustive background checks on new recruits is a better form of prevention. “If they’ve been dishonest to gain employment, they’re more likely to commit fraud or theft once inside the company,” he says.
With so many other things to focus on, crime prevention is often a long way down the list of priorities. And with police resources stretched to the limit, it’s increasingly up to business owners to be proactive. Identifying points of weakness and taking steps to address them is a positive first step.