Small Business Questions & Answers


Filed under Running Your Business

Ask About Security

by Nervous Nelly | May 24, 2012

Subject :Security and Risk Management

Dear Toolkit,

Got any quick tips about how to keep my new business safe and secure from things that go bump in the night and other preventable perils?


Nervous Nelly

Dear Nelly,

Some of the most common pitfalls in business can be avoided if you pay attention to some simple security precautions. One ongoing commitment should be to always open any and all mail yourself, personally. Don't ever delegate this chore. Most of the mail you'll receive will be routine in nature, and this task could easily be assigned to an employee. But that one piece in a thousand is the one you can't afford to miss seeing first. You will be amazed at the things you can learn from tending to this seemingly low-level task.

If your bookkeeper were to embezzle funds and use the cash float to cover up the ensuing overdrafts—and you always hand the unopened and unread bank statement to your bookkeeper because, after all, bookkeepers reconcile bank statements don't they—there's no way you could learn of this problem until it's too late. Returned check notices come in the mail, but if you don't open the mail you'll never know what they are or why.

Sign all checks yourself and be sure to limit company credit card holders to yourself and key employees. If you see the monthly bank statements and credit card statements every month, and you will if you open all the mail personally, you'll be in much better control of your business.

Complaints come via the mail as well. Do you want them hidden from you? Valuable information and opportunities come in the mail, but if you're not exposed to these you'll never know what you missed.

It's not necessary for you to process the mail. That can be delegated once you've opened it. But you must permit yourself to learn first-hand what's coming into your business or, in some cases, what isn't coming in.

And don't just apply these measures to snail mail—be sure to personally check your company's email daily too.

Use passwords, and change them often. Restrict access to your electronic files as much as you can. No one needs to know all about your business but you.

Also, back up your data every day. And store that backup data in a location away from the site of your computer.

Preserve your confidentiality. Be discreet about how much you reveal of your business or personal information to anyone, including your banks. Your accountant and attorney need and deserve your full disclosure in order for them to serve your needs properly. Their confidentiality obligations to clients are universally respected. But others, such as banks, creditors and suppliers, will always ask for far more than they actually need. Just because they ask for it doesn't require you to give it. Negotiate on a need-to-know basis.

Securing your physical premises doesn't need to be an expensive luxury. Locks and keys may be low tech, but they're a high priority for securing physical assets. And it's a good idea, by the way, to have your locks changed periodically.

Official-looking signs in your windows or parking lot are also a low-tech, low-cost example of sensible security measures. A subtle notice saying "we prosecute shoplifters" or "cars will be towed at the vehicle owner's expense" or "premises protected by XYZ alarm systems" can be surprisingly effective. And you can even get a dummy TV camera with a little flashing red light. Mount this on your wall and see how high tech you look.

The sophistication of your security systems is limited only by your budget. The technology is there for silent burglar alarms, fire alarms, motion detectors, electronic tapes to mount on glass, trip wires, exploding dye packets, and all varieties of electric eyes. Consult with a security firm and get a menu of choices and prices in order to evaluate what would be most cost-effective for your business.

Manage your risks with insurance. A clumsy client trips on the antique oriental rug in your office, falls, and considers retiring on the proceeds of this misadventure. Or your product is swallowed by a customer's dog, with the predictable ill effects. Or your inventory gets fried in a warehouse fire—along with your computer, which held all your accounts receivable records, among other irreplaceable files. To avoid losing a lot of sleep, evade these potential pitfalls and manage your risk.

Managing risk can be done in several ways. Once you've identified a risk, you can elect to:

  • prevent it — by, for example, practicing good fire safety
  • avoid it — by, for example, subcontracting a part of your product manufacture involving hazardous materials
  • spread it — by, for example, backing up your computer files and keeping the copy at a separate location
  • absorb it — by assuming that certain losses are an acceptable cost of doing business
  • transfer it — by sharing the risks with an insurance company

In most cases, risks that you can't readily handle or predict are best transferred to a reliable insurance carrier. You are no doubt familiar with personal lines of insurance, such as homeowners, auto, life, disability, health and even home business owner's coverage. But if your business is located away from home or if it's home-based but growing fast, you'd be well advised to see a business insurance professional and evaluate the cost-benefit of transferring your risk via a comprehensive insurance package designed to protect your particular circumstances.

Like your mother always told you, it's always better to be safe than sorry, so don't scrimp on security.