The concept of loss; monetary loss, loss of inventory, or loss of reputation, can be broadly examined from two viewpoints – at the microeconomic retail level where losses affect the day to day business operations, and at the macroeconomic corporate level where losses jeopardize the company’s survival.
Mounting losses seriously impact business operations, the product’s market share, and the public perception of the company’s brand image. Loss prevention collectively describes the strategies reducing or preventing business hazards from spiraling out of control. Asset protection in comparison is the creation of a legal framework to protect the company and the promoter at the corporate level from damaging lawsuits.
Both loss prevention programs and asset protection plans safeguard business interests, albeit from different angles, and every business requires a combination of both loss prevention and asset protection plans to safeguard an exponentially growing business empire.
Expert loss prevention and asset protection consultants argue that failing to prevent losses and protect assets exposes companies to myriad problems that escalate and strike at the very foundation of business wealth creation and ethical business practices.
The 30th Annual Retail Theft Survey conducted by Jack L. Hayes International in 2017 revealed that retail giants recovered $188 million in stolen goods from over 400,000 shoplifters and deceitful employees, pinpointing why loss prevention plans are the need of the hour. Here are the top three loss prevention strategies that help you stem the erosion of your business inventory:
The EAS tag fixed on high-value items cannot be manually removed by the shopper. The tag receives and transmits signals to an antenna stationed at the firm’s entrance. The tags are designed to beep an alarm the moment an unsold or stolen tagged item crosses the company threshold.
The RFID is an advanced device that shows you where retail goods are located in a real-time tracking scenario. A truck transporting goods from Boston to New York, fitted with an RFID reader and sensors, can tell you whether the goods have arrived intact in New York. If an article is removed in transit, a cautionary message is transmitted to the company’s centralized logistics network.
At any moment of time, billions worth of cash and commodities with a high degree of sensitivity and value would be traversing the nation. The intelligent technology embeds plastic and aluminum casings with a three-tier security protocol that improves the visibility of the product, enables GPS tracking, and prevents unauthorized access using a lock and key function that can only be operated at the shipping and destination points. Sensors can be embedded in virtually any kind of packing from cash deposit bags, coin bags, and sealed security covers, to tamper-proof cash vault shipping containers.
The sole proprietorship all-in-one business entity exposes both business assets and personal wealth to predatory lawsuits and adverse judgments. Change your business into a Limited Liability Company (LLC) or S Corp that separates business assets and personal properties, safeguards your personal income stream, and bestows tax advantages.
Piercing the corporate veil is a strategy adopted by creditors to make the shareholder responsible for corporate liabilities and obligations. A perverse judgment could see you lose personal assets along with business assets. The ideal solution is to separate your income stream and bank accounts from company accounts and transfer all high-value properties in the company’s name.
Shift from direct rental income to company leased properties. Move the title of high-value properties and industrial (and office) equipment in the company’s name. Regularize hiring of employees only through a designated recruiting infrastructure operated by the company.
Hire company professionals to handle contracts and execute service agreements, and do not use personal emails and avoid direct client contacts for business purposes. Professionals hired for specific duties should be licensed, bonded and insured.
When the business faces liability suits and damage compensation claims, it should be the insurance company picking up the million-dollar tab, not you. Review all existing insurance policies to ensure you’ve backed up every business risk conceivable. Take insurance cover that is most appropriate to the risk that you intend to cover and don’t fall for the “this policy covers everything” trap.
If your home state provides this protection, all personal assets that you place under the tenancy-by-the-entirety clause can protect you from lawsuits that make you liable for losses when your spouse or partner is sued. It’s just a matter of titling personal properties appropriately.
If a partner or spouse follows an occupationally risky role or a hazardous lifestyle that could attract lawsuits, it could be strategically significant to move high profile assets outside the purview of the partner’s suit. Generally, a creditor can only pursue claims against the defaulting spouse and cannot attach properties that are separated legally.
Holding properties and bank accounts jointly with the spouse could expose you to joint liability claims. Consider a prenuptial agreement that separates property ownership to reduce the chances of personal loss and liability claims following separation and divorce.
Creditor claims, property tax liability, and the death of the homeowner can severely compromise the value of the home if the property is not legally protected. Fortunately, most states allow homestead exemption that ensures that external liability claims are limited to a fraction of the actual value of the property.
Growing a business runs concurrently with the growth of one’s personal income and wealth, and business promoters would do well to heed the advice that we have detailed. These thought-provoking yet straightforward tips should go a long way in preventing unexpected losses and protect assets that you’ve grown through decades of hard work and effort. Next time a lawsuit appears on the horizon, you’ll be better prepared to face the legal onslaught with all guns blazing.