Small Business Fraud Is often Overlooked

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For most it is a big thing starting a new business. Many think about it but find raising cash or planning the strategy very difficult. When it all comes together it can be very satisfying indeed. After all this hard work it seems a shame that most neglect the very real risk that the fraudster will strike at the fledgling company.

Fraud is a business risk. Problems with locating customers and seeking suppliers of goods are business risks that the new venture will have to face. Problems with the latter can result in poor performance or even business failure, as can the unwanted attention 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.

Fraud prevention controls in a business are very cost efficient. 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 much more that will never be reported - 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.

Small businesses and new start ups are often managed by the financially naive. 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.

Therefore, when starting a new business it pays to spend a few hours writing a fraud prevention policy. 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. Not only will the exercise help to prevent fraud but will also add to the control and understanding that the new proprietor has over his new venture.

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Mark Jenner is a Chartered Accountant, a Certified Fraud Examiner and has a Masters Degree in Fraud Management. His forensic accountancy business undertakes fraud investigation, asset tracing and money laundering prevention. He also advises on small business opportunities. His web site provides free advice and useful articles =>

http://www.businessopportunitymarket.com