How Can Small Businesses Avoid The Attention Of The Fraudster?

There are a lot of difficulties to surmount when starting out in business. These can involve finding the right business or raising enough cash. In time the business gets off the ground and the feeling of achievement can be reward in itself. The trouble is that this is the time when the risk of fraud should be considered, yet most do not.

Fraud is a business risk. There will be many business risks to face including problems with finding customers and difficulties locating supplies at the right price. Sub standard performance or even business failure can result from problems concerning the latter, with similar results from the work of the fraudster.

When a business is struggling to find its feet, it can be vulnerable to a number of different frauds. In a rush to find new sales leads, the new business may sell to companies with a bad credit risk and never get paid.

Another favourite fraud is the sale of goods that will have no commercial worth to the business, usually by hard selling techniques over the telephone. Fraudulent charity publishers are in this category and will try to solicit funds for worthless adverts in a desk diary or wall planner from the new business for some spurious good cause. Very little if any money goes to a charity and the publications will not be circulated to good effect. The money essentially goes to the crooks.

Prevention of fraud controls are usually inexpensive. You should take a while to think about the risk of fraud to your business, an activity that will only cost you your time. Fraud targets those that are complacent about it. The National Fraud Authority estimates the economic cost of fraud in the UK to be £30 billion every year. Much of this - and a great deal more that may never come to light - is fraud found in small new businesses. If the owner manager takes some time to simply think about where losses might occur, the chances are that he will prevent those losses from ever taking place.

The managers of new business start ups are often financially naive to begin with. With the best intentions to make a success they may not be ready for the financial burden of running their business. Unless the new businessman was an accountant, chances are that they will have to learn new financial skills.

As a result, it is worth while spending some time considering a fraud prevention plan when starting a new venture. This need only be a few sides of paper that sets out the key areas of risk and what the owner thinks he needs to do to avoid losses. A lot of fraud will be prevented by this exercise and also the new proprietor will get a much better overall grip on his new venture.