Small business fraud – the untold story
Fraud costs small businesses money – lots of it. But that’s not the end of the story. In fact, for some business owners, that’s only the beginning of a rather painful journey. Whether the fraud involves employees, third parties, or both, the impact on a small business often takes the following forms:
Fraud destroys the owner’s confidence – Having a fraud take place on your “watch” can trigger a wide range of emotions. Anger, frustration, regret, and self-doubt are all normal reactions to fraud. How the owner overcomes those emotions can make a huge difference in how quickly the business recovers – or whether it recovers at all.
Opportunities to expand disappear – Opportunities to expand typically require a cash investment. While the fraudsters line their pockets with your cash, opportunities to expand evaporate.
Family and friends lose faith – Many small businesses, at least initially, rely upon investments from family and friends. When the owner has the unfortunate task of notifying them that the company has been a victim of fraud, the reactions can range from pity to anger. Post-fraud, investors are understandably reluctant to put more money into the business.
Likelihood of business failure increases – With less cash on hand, small businesses are often unable to respond to the inevitable “surprises” that occur while running a small business. In the event that a critical piece of equipment breaks or cash is needed to meet payroll, the company’s financial resources can be stretched to the breaking point. Meanwhile, the fraudster is spending the product of the fraud as they please.
Preventing fraud losses keeps hard-earned cash in the business. Just as importantly, it also helps small business owners avoid the severe emotional toll that fraud creates.
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