Having losses in business is something that happens very often, and all that businesses can try to do is optimize their management strategies. All companies must consider how to reduce, avoid or prevent losses. To do this, it is necessary to develop strategies that help provide a good service and that favor a better use of resources, without neglecting the possibility of increasing employee productivity.
This article observes loss prevention measures that can be beneficial to implement in a business’s loss prevention program. These 10 business planning advices are great to reduce losses.
What Is Loss Prevention?
Loss prevention measures are management strategies that reduce losses and prevent excess business losses. These measures proactively address situations that could hinder the efficiency of the operations of a business. They are a form of risk management practice.
Losses are anything that cause negative impacts on the economic profitability of a business. Here are some examples of types of losses:
- Waste of resources
- Cargo theft and shoplifting
- Damaged, lost, or expired goods
- Check or card fraud
- Delay in receiving supplies and/or goods
- Reprocesses due to errors or lack of standardization in the processes
- Equipment, materials, or physical spaces damaged
The solution to minimize losses is to develop an action plan that implements loss prevention strategies that can rectify, prevent, and monitor these situations.
Why should every business have a loss prevention strategy?
Every business should have a loss prevention strategy since losses are a fact of life for business owners. Rather than being blindsided by reality, it is better to prepare for the inevitable and prevent excess business losses.
10 Loss Prevention Strategies
Whether you are looking for good risk management practices, business planning advice, or effective management strategies, these 10 loss prevention strategies are a mix of old school methods and modern tools to monitor the losses of a business.
Planning is one of the first things any business must do to avoid financial losses. To do this, try to focus on the services or products that you are going to offer to customers. This entails collecting information regarding sales and observing what the competition is doing. Once the long, medium, and short-term objectives of the company are defined, it will be easier to alter the allocation of resources.
Organizing the functions of your employees in a coherent whole is one of the most crucial steps for a company. To reduce losses in a business, it is recommended to observe if all the workers are performing a valuable function. Sometimes excess business losses are caused by uncontrolled employee absenteeism, so it is important to recruit the best possible candidates and to have a talented human resources team.
3. Gemba Walk
Gemba is a Japanese word which means “the actual place.” In terms of lean management, Gemba is the action of walking the workplace and using a standardized checklist to take notes destined to improve work processes.
It is a fact-based technique that relies on observation instead of report analytics to increase productivity and safety. Gemba Walk can significantly reduce human error. It is a powerful application for continuous process improvement, which helps increase efficiency and reduce waste by digitizing your management. Some of the benefits of the digitalization of your gemba walk are:
- Reduced data collection time
- Thoroughly documented issues
- Quick assessment and problem solving
Knowing how to make decisions is also a very important aspect. Today, many companies are stable and profitable because they have made good decisions in capital management, resource operations, or technological innovations. As you may have realized, losses in business can be due to many factors, which can be economic or human related.
5. Think of Your Customers
The important thing is to provide a good service to ensure that your customers are regular buyers of your products or services. Many business losses are caused by bad reviews on the web and customer complaints. Customer service should not be taken lightly, it can affect you enormously. Managing your online presence is a must.
Develop an action plan to resolve your complaints or negative comments in places like Google My Business, since it is your letter of introduction to potential clients. It is also a good idea to implement a live chat or chatbot on your website and social networks.
6. Map Your Losses
You must map the losses and vulnerabilities of your business. The more complete and specific your assessment is, the less likely things or money will be lost. Past mistakes won’t be repeated this way. You must carefully analyze all the processes that are carried out within the company. It is advisable to carry out a stock survey, cross-check the information with the inventory, and identify waste points and bottlenecks.
7. Integrate Your Strategy Into the Company Culture
You should understand that the success of your loss prevention program will depend directly on the awareness and commitment of each of the participants. There is no point in setting goals and functions for only some employees. If you do not involve everyone, the goals will not be reached and the plan will probably fail.
Each one of the members of your company must be aware of their function and the importance that their role has for the prevention of losses in the company. It is important to inform and train your team properly.
8. Get Rid of Unsold Products
You will accumulate retail losses as business years pass and unsold products will become cumbersome. A strategy to effectively solve this issue is to sell these products to other companies that are responsible for buying and selling them. You can also make promotions with other products that are sold regularly.
9. Administrative Errors
One of the reasons why a business has losses is poor management strategies when planning, budgeting, or accounting for orders, invoices, expenses, or trips. To avoid any mismatches, it is recommended to hire experienced managers. Human errors in the global management of the company such as increasing a customer’s line of credit without properly checking their payment history can also be one of the reasons why a business has losses.
10. Evaluate Your Space
A good store layout can attract potential customers, while also facilitating circulation in the business. This can surprisingly improve productivity. When evaluating your space, you should also consider the website of your company as it is an important showcase for products and services.