How a $3,000 Camera System Investment Earned a Measurable Return of $45,000

A Case Study in the Practical Application and Benefits of Surveillance in Today’s Retail Environment.

We hear every day how much employee theft is costing the small business owner. Last year the estimates claim a total loss of SIX HUNDRED AND SIXTY BILLION DOLLARS according to a recent report from the Association of Certified Fraud Examiners. Not only that, but a full 46% of that, almost half, or approximately three hundred billion dollars occurs in small businesses with fewer than 100 employees. THAT’S YOUR BUSINESS! That’s Billion with a B, that’s ten zeros. $660,000,000,000. Stop and think about that for a second. Seriously, STOP. Think about how much money that is. How much of that Six Hundred and Sixty Billion came out of your pocket as a small business owner? Likely more than you think. 

Let’s take this massive 12 figure number and break it down into a real case study. I have worked recently with one customer who operates on razor thin margins. Because of these razor thin margins this customer was originally hesitant to make an investment of approximately $3,000 for a small professional digital surveillance system. It is understandable; $3000 can be a lot of money for a small business. Fortunately this customer had an inkling of the truly massive amounts the business she was losing due to employee collusion.  I say inkling because this customer made the decision to protect the store based on the rising difficulties of running multiple locations, and was not really, truly convinced of the losses the stores were realizing every day. The truth of the matter is that the video surveillance system helped to identify some very substantial losses. These losses were occurring in small amounts on a daily basis so that the day to day cash and financials were not severely impacted.  Think about it, if you’re missing $150 a day from missing product, “cancelled” appointments, credit cards converted to cash in pocket, and various other mischievous employee actions it may be difficult to spot. As a matter of fact, $150 a day in losses in a retail environment is usually the tip of the iceberg. At the end of the year however, when that $150 adds up to approximately $45,000 it becomes a little easier to see that something is horribly wrong. This is a casebook example of the truly disastrous effects of employee theft. 

Let’s begin with identifying what was actually happening in the store. The business we are looking at is a service based retail establishment focusing on families and retaining existing customers for recurring business as often as possible. What it is that they do is unimportant, and I will not divulge due to their competition being well aware of how much quicker this company is growing. The positive impact on losses that their surveillance system provides is partially responsible for allowing this success.  The store employs several employees and accepts cash, credit cards and checks. The losses were becoming more and more visible as the store owner began implementing simple checks and balances for each day’s numbers. As these policies were implemented various inconsistencies became apparent. Credit card receipts that did not match the appointments in the system, certain employees had much higher percentages of “cancelled” appointments, and correlations between profitability and certain employees scheduled work dates led my customer to become suspicious of the daily goings on. 

The next step the owner took was vital to the success of stopping the losses. She began to think like a thief. Separating herself from the situation allowed my customer to see opportunities for losses that she had not previously spotted. Concerns began arising due to discrepancies of tip amounts on credit cards and those entered into the point of sale system. At this point the store owner began keeping a closer eye on numbers and consulting with the video surveillance system, referencing certain times from receipts and cancelled appointments to verify whether payment was received and if customers were in fact walking in the door when the log books showed cancelled appointments. She began looking to see whose hands were in the tip containers at their front counter by watching video from a single camera placed over the register area.  She began implementing even more checks and balances and eventually suffered a severe loss. One of the employees had deleted all the records from the point of sale system.  According to the computer, this employee never worked there! All records of sales, taxes collected, appointments cancelled had been lost. There was hope though, due to the data the store owner had been collecting and the checks and balances in place physical records of this employee did exist and provided more than enough evidence to confront the employee and terminate them with police assistance.  The key here is that video and physical data provided enough evidence to accurately rid the store of the problem and stop the losses which were conservatively estimated at $150 PER DAY from this single employee! This employee was responsible for losses which would have added up to $45,000 in a single year. Can you imagine paying someone a $45,000 annual bonus for the privilege of stealing from you, putting your business at risk of severe financial damage, risking the jobs of all your employees and defrauding your customers? This happens every day in every retail establishment in America.

In today’s world it is not enough to rid ones business of the drain, the thieves, the losses and the deceitful employees. Business owners must reward those that have proven to be trustworthy and a true asset to their company. This business owner did just that. After this was all over, she rewarded the individual store managers with a sizable annual increase in pay as a sincere thank you for following the procedures and checks and balances that have allowed for increased prosperity of the business.  There is an old adage, “when the cats away, the mice will play.” By doing this the business owner has created more cats. Not only this, but she has removed temptation by ensuring that the video surveillance systems can be viewed remotely at any given point in time. The first challenge is keeping the honest people; the second challenge is keeping the honest people honest.

When looking at cases like this in hindsight, the $3000 initial investment becomes a no-brainer.  After all, who wouldn’t spend $3000 if they knew they would stop $45,000 in losses?  The problem lies in that there are not many small business owners out there who believe they are losing upwards of $45,000 a year per store. Well, that $660,000,000,000 has got to come from somewhere, and I will tell you that the horrible truth is that it is likely coming out of your pocket in larger amounts than you can imagine.  The fact remains that this customer has not stopped all of the losses in their business. The system has been paid for in full and a return on investment has been realized in spades, yet the surveillance system, due to its practical application into the day to day business activities of this customer keeps providing measurable results that result in improved business practices that ultimately mean more money in my customers pocket.  Imagine that the surveillance system were an employee.  Would it not be an amazing investment to hire a manager who would work a lifetime for the paltry sum of about 6 weeks worth of wages, never take a vacation, never require benefits, and never ask for a raise? Now add to this the fact that this employee will never lie to you and happens to have photographic memory (literally), and the decision to buy a properly designed digital video surveillance system becomes a need and not a luxury. How much is your business losing every year?

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