Small businesses face an array of crimes—both physical and virtual. They may experience burglars, robberies, vandalism, shoplifting, employee theft, embezzlement, or other fraud. According to the U.S. Chamber of Commerce, retail theft has increased 50% over the past 5 years. Small businesses may also experience hacking, ransomware, and other cybercrimes. The FBI noted that the majority of cybercrime victims are small businesses. The cost of these crimes can be tremendous—both financially and emotionally. For owners with enough fortitude, there are ways to push on and gain a measure of protection. For others, the problems may just be too much, at least in their current location.
Some options to consider:
Change your operations
How you run your business may need to change in order to thwart crime as best as possible. Some ideas:
- Change your hours. Staying open 24 hours each day may deter some crime. A local deli owner I know did this and saw his losses go down.
- Change your prices. Small retailers may raise prices to offset losses from “organized theft” (shoplifting by criminal gangs).
Review insurance coverage
Most business owner policies (BOPs) provide coverage for losses due to theft, looting, vandalism, etc. But is the policy limit you currently have sufficient to cover potential losses? Discuss your current coverage with your insurance agent so you can make adjustments to your current policy or obtain additional coverage. For example, you may want to get business interruption insurance to cover losses if you have to shut down while making repairs due to vandalism or rioting that impacts your location.
There are some measures that can help to minimize or avoid being victimized, such as:
- Improving physical protection. This can be better locks, safes, and security systems for your physical location. Texas’s Small Business Crime Prevention Guide has many tips to help.
- Improving cyber protection. The Federal Trade Commission offers 10 cyber security tips for small businesses.
- Working with professionals. This may mean hiring security guards or engaging cybercrime professionals if you can afford to do so. The cost of hiring professionals may be less than any potential loss from the crime that’s averted.
Shut down (and maybe relocate)
Sometimes, despite perseverance by owners and taking every step possible, it becomes impossible to stay open. Consider the following situations:
- Rains PDX, a clothing store in Portland, Oregon. The owner reported experiencing 15 break-ins in an 18-month period. Insurance stopped making reimbursements after the third break-in. The store closed down because the owner could no longer sustain the losses.
- City Winery, an entertainment venue in Washington DC. The business closed one location because of crime in the neighborhood but was hoping to relocate.
Options for owners:
- Relocating to a new area that is less crime ridden. This may be to another part of town or to another state. Truic notes small businesses are fleeing California and moving to Arizona, Florida, and Texas. In fairness, these moves are not entirely due to crime; the cost of living, taxes, and other factors come into play.
- Morphing to an all-online business. The pandemic era demonstrated that businesses can function well operating online in lieu of bricks-and-mortar. While this option can’t be used by every type of business, many can. It will protect from physical crimes, but then, of course, you need to protect against cybercrimes.
For owners with a will to have a thriving business there is always a way. That way may not be easy and may entail numerous detours, setbacks, and financial cost. Review everything…how you run your business and what challenges you face.
And remember what Michael Jordan said: “Obstacles don’t have to stop you. If you run into a wall, don’t turn around and give up. Figure out how to climb it, go through it, or work around it.”