Category: Down to Business

 

Cyber criminals love a good holiday spree! In the midst of 2013’s holiday shopping season, they stole the personal data of more than 70 million Target customers. Around the same time, a data breach at Neiman Marcus compromised the credit and debit card information of more than 1 million customers.

These particular crimes involved large retailers and a website that reportedly earns more than $14 million in profits each year, but if you think your company is too small to be an attractive target, you’re wrong. A 2012 investigative study into data breaches found that 71 percent occur in businesses with 100 or fewer employees. And according to cyber security company McAfee, almost 90 percent of small and medium-sized U.S. businesses don’t use any form of data protection.

Fortunately, there are many steps you can take to prevent the theft of your small business data—and much of it won’t cost you a dime. Consider the following suggestions:

• Protect every computer with appropriate software – Install an antivirus and antispyware program on every computer connected to the Internet or your internal network. This includes any laptops you allow to connect wirelessly.
• Install software updates promptly – When software vendors discover vulnerabilities in their products, they release updates with fixes that prevent cyber criminals from exploiting them. Configure each computer to download and install such updates automatically.
• Secure your Wi-Fi network – Require a password for Wi-Fi access. For even more protection, hide your Wi-Fi network by configuring the wireless access point or router to prevent broadcasting of the network name.
• Secure computers and network components – Require passwords for login on all office computers, and change those passwords regularly. Keep your network server in a locked location, and lock up any laptop computers when not in use.
• Establish cyber security rules – Teach your employees what they need to do to protect your small business data. Create and document clear guidelines for computer, network, database, email and Internet usage as well as penalties for violating those guidelines.

According to the Center for Strategic and International Studies, cybercrime costs our nation $100 billion each year. Implement the suggestions above and minimize your chances of contributing to that statistic. For additional financial protection, talk to your insurance professional about a comprehensive coverage package that includes cybercrime.

 

 

You’ve poured your heart and soul into your business—shouldn’t you protect it? Evaluating your insurance needs is a critical part of business planning, one that will help you protect your investment by minimizing risks, liabilities and losses. Of course, it’s also a difficult road to navigate alone. Whether you’re just starting up, hiring your first employee, or planning for future growth, enlist the assistance of a reputable insurance advisor. He or she will help you review a number of factors to select the right insurance for your company structures, activities and locale.

 

Business Profile

The types of commercial business policies you need depend on your unique business profile. Your insurance advisor will consider factors like whether you rent or own your office space, your number of employees, whether you ever use temp workers or contractors, whether you produce goods or provide services, if your company leases or owns vehicles, if your business involves large quantities of cash, and how quickly you could resume business if your office were destroyed in a fire or flood.

Some types of insurance are required by law (such as employer insurance), while other policies are just a good idea.

 

Employer Insurance

If you have employees, state laws require you to pay for certain types of insurance. These include workers’ compensation insurance, unemployment insurance and disability insurance (depending on your location).

 

Commercial Business Insurance

While structuring your business as a corporation or LLC will protect your personal assets in the event of business liabilities, it will not cover losses your business may incur in the event of a lawsuit, natural disaster or other unfortunate event. Commercial business insurance policies include general liability insurance, product liability insurance, professional liability insurance, commercial property insurance, errors and omissions insurance, key executive insurance, business continuation insurance and home-based business insurance.

 

Unexpected Events

You and your insurance advisor should discuss your business risks in regards to unexpected events including the death of a business partner, an injured employee, a customer lawsuit or a natural disaster. Any of these misfortunes can destroy an uninsured business. The amount of commercial insurance your company needs depends, at least in part, on how aggressively you want to manage those risks.

 

Reassessing Coverage

As your business evolves, your liabilities change. Meet with your insurance advisor annually to ensure disaster does not strike while you are underinsured. If you hire additional employees, invest in new equipment or expand your operations, contact your advisor as soon as possible to discuss the implications for your insurance coverage.

While you need to include insurance premiums in your budget when planning your business, many policies are actually quite affordable, especially when you consider the potential losses your business may incur if you choose to operate unprotected.

 

 

Increasingly, despite the economy, businesses are turning to temporary workers as a way of getting the job done. In fact, by 2020, more than 40% of the US workforce will be free-lancing. That’s nearly 60 million people and it’s pretty easy to see why. Not only is it easy to hire temps as needed, or as revenue allows, they are also typically exempt from benefits and payroll tax withholdings, costing an employer less than a full or part-time permanent worker.

Unfortunately, many business owners don’t really understand the legal difference between a temp and an employee. According to one Department of Labor (DOL) study, 30 percent of employers misclassify workers. It can be a costly mistake, especially as the IRS, DOL ,and state governments are increasingly sharing information to crack down on the problem.

While you should always consult a professional when determining the status of any employee, consider the following basic differences between temporary workers/independent contractors and regular staff.

• If you control how, where or when the individual performs assigned tasks, he or she is an employee, not a temp worker.
• If you provide the tools needed to perform assigned tasks (including office space, computer or software) the workers is an employee, not a temp.
• If you prohibit the individual from performing the same tasks for other businesses, he or she is an employee, not a temp worker.
• If the assigned tasks completed by the individual are key aspects of your business, the IRS may consider him or her an employee rather than a temp worker.

In the event that a classification dispute goes to court, many take the following considerations into account:

• What degree of control does the worker have over assigned tasks?
• What is the worker’s risk of loss?
• Who pays for supplies and equipment?
• What types of skills are required to perform the work?
• Is the work temporary in nature or indefinite?
• Is the worker an integral part of the business?

While a written contract doesn’t provide guaranteed protection if you’ve misclassified an employee as a temp worker, it is better than an oral agreement should the IRS or courts get involved in a dispute. Make sure you include a description of the services to be performed, payment arrangements, who is responsible for expenses, who will provide materials, a statement that this is an independent contractor/temporary worker relationship, a statement that the worker is responsible for his or her own state and federal income taxes, the length of the project, any circumstances under which you may terminate the agreement, and how you will resolve disputes.

 

 

 

From a worker who is unqualified for the job to an employee who steals from the office, bad hires are potentially costly. How much so? According to the U.S. Department of Labor, the price tag on the average bad hiring decision is equivalent to 30 percent of the individual’s first-year earnings. Fortunately, careful pre-employment screening can go a long way towards ensuring only quality professionals join your team—but the process has to be compliant. Consider the following background check mistakes that can take a big bite out of your business bottom line.

Failure to Request Permission to Run a Credit or Background Check

Under the Fair Credit Reporting Act (FCRA), employers must obtain jobseeker approval before accessing credit, criminal or other records as part of a background check. Titled “A Summary of Your Rights Under the Fair Credit Reporting Act,” a new version of this document was released by the Consumer Financial Protection Bureau in early 2013. Some employers have already been subjected to multi-million dollar lawsuits for using the old version of the document. Failure to obtain written permission at all carries a penalty of $2,500 per violation.

Failure to Send Adverse Action Notices

The FCRA also requires employers to notify jobseekers in writing if they intend to take “adverse action” due to the information a credit or background check reveals. In the case of a job application, adverse action means employment disqualification. The employer must provide jobseekers with both pre-adverse action and post-adverse action notices that include the contact information for the credit or background check company and advises them of their rights to dispute the accuracy or completeness of the information. In 2009, the Federal Trade Commission took action against two freight services companies that rejected applicants based on background checks without informing them of their FCRA rights. The companies paid $77,000 in fines.

Rejecting All Convicts and Felons

In 2012, the Equal Employment Opportunity Commission (EEOC) issued guidelines to employers for use of the information obtained through criminal background checks. To avoid potentially discriminatory hiring practices, the guidelines encouraged businesses to consider factors such as type of crime, whether it was an arrest or conviction, and how long ago it occurred before denying an applicant employment. Earlier this year, Pepsi Beverages agreed to pay $3.13 million after an EEOC investigation revealed the company’s criminal background check policy discriminated against African Americans.

Failure to Conduct a Thorough Background Check

Conducting an incomplete background check—or failing to verify a jobseeker’s background at all—can expose your business to a negligent hiring lawsuit should the new employee endanger or injure another worker. According to the U.S. Department of Labor, assaults and violent acts accounted for 18 percent of business fatalities in 2009. Should an employee, client or vendor sue your organization as a result, the National Institute for Prevention of Workplace Violence reports verdicts in favor of the plaintiff have been as large as $40 million.

If you’re concerned that your pre-employment screening policies may not comply with current state and federal laws, consult your legal advisor or a human resource professional.

 

 

 

Questionable claims are worker’s compensation claims insurers refer to the NICB for closer review and investigation because they appear to be fraudulent. According to the NICB’s analysis, insurers reported 3,474 claims as questionable in 2011. That number continues to increase based on data analysis of the first six months’ reported questionable claims.

Insurers may choose to refer a worker’s compensation claim to the NICB as questionable for several reasons. However, according to the recent report, the three most common are claimant fraud, prior injury/not related to work and malingering. These reasons topped the list in 2011, 2012  and 2013.

Claimant fraud is a very broad category that includes knowingly making false worker’s compensation claims, faking or exaggerating injures, filing multiple claims and failing to report income from second jobs. An insurer may select prior injury/not related to work if he believes an employee’s injury occurred prior to obtaining employment or was sustained while off the job. He might select malingering as a reason if he believes the employee is faking or exaggerating symptoms in order to continue collecting benefits after recovery from a legitimate injury.

While employers in big states like California, Illinois and New York suffered the most questionable worker’s compensation claims in total, the rankings changed when the NICB considered claims per 100,000 residents. When analyzed in that way, Delaware topped the list in 2011, Connecticut ranked first in 2012, and Maine led the pack in 2013.

Be prepared:

Consider these three warning signs that may help you spot questionable worker’s compensation claims before they are filed.

1. Absence of witnesses. An employee attempting worker’s compensation fraud may claim his or her accident occurred when no one else was around.
2. Monday injuries. Unlike a mid-week injury, it’s possible an accident reported on a Monday may have actually occurred over the weekend.

3. Repeat claims. One study indicated that 37 percent of employees who filed one worker’s compensation claim would eventually file another.

According to the NICB, worker’s compensation fraud accounts for one out of every four insurance fraud claims in the U.S., costing employers billions of dollars each year. Consult with your insurance professional about ways you can protect your business from questionable worker’s compensation claims.

 

 

Tornados and earthquakes, fires and flooding, chemical spills and terrorist attacks—disasters, natural and otherwise, can happen anytime and anywhere. Even if an unforeseen event doesn’t directly damage your property, the power outages and travel disruptions that occur during many emergencies may prevent you from shipping and receiving products and supplies or otherwise affect your day-to-day business operations. Fortunately, an emergency plan can help prepare your small business for the unthinkable.

According to the Red Cross, as many as 40 percent of small businesses that are closed due to a catastrophic disaster never reopen. Because they did not take the time to prepare for potential emergencies, their employees lose their jobs. The economy of their community suffers as well. Fortunately, when you develop a disaster plan that addresses human resources, physical resources and business continuity, you’re taking an important step to protect the well-being of your company, workers, customers and the neighborhood of surrounding businesses.

Human Resources

In a disaster situation, your employees are certain to be one of your primary concerns. To facilitate timely communication, maintain a list of emergency contact information for all workers. This should include email addresses, phone numbers and a number for a close family member who may be able to get a message to them if you’re unable to contact them directly. Distribute copies of the list to key staff members and store one in an offsite location as well.

You may also want to consider setting up a voicemail number where you can record messages for employees in the event of an emergency such as a winter storm or other potentially dangerous weather event. Publicize the number and encourage your employees who are offsite when the disaster occurs to call it to retrieve information on late starts and closures.

Physical Resources

It’s not uncommon for emergencies to occur during business hours, putting your employees at direct risk in the workplace. Taking a few steps to increase their safety in the event of a disaster can go a long way towards minimizing danger. This may include installing emergency lights that remain on during power outages, investing in a NOAA Weather Radio, and stocking the supplies your employees will need if they are forced to remain on the premises for an extended period. At a minimum, you will need one gallon of water per employee per day, at least three days of non-perishable food, flashlights and extra batteries and first aid kits.

Business Continuity

The faster you can get your business running again, the less the disaster will impact your bottom line. There are many steps you can take to facilitate continuation of business, even if you have to do so offsite. Start by backing up your computer data at least once a day and making copies of all important records. Store this information in a safe location offsite. Call forwarding for your main business line can be a valuable investment. It will enable you to respond to customers from outside the office, though you should ensure you can activate it remotely. Additionally, maintaining a one to two-week stock of the goods and supplies you’ll need to continue producing product may be wise.

Many insurance policies do not cover earthquake or flood damage, so talk to your agent about your business insurance limitations. If necessary, add riders to protect valuable property and equipment. You may also wish to explore business continuity insurance. Also known as business interruption insurance, it will provide you with protection for the loss of profits as well as coverage for fixed expenses in the event you must temporarily close your business due to a disaster.

 

 

 

 

Remote employees are increasingly common in today’s businesses. According to a New York Times article published last year, the number of remote workers—which includes full-time telecommuters, self-employed freelancers, and other professionals whose work is traditionally done outside an office—could presently be as high as 30 percent of the American workforce.

As an employer, offering work-from-home flexibility can increase your company’s appeal in the eyes of job candidates—giving you a competitive edge in the war for top talent. Additionally, outsourcing some projects to self-employed freelancers can help you reduce your operating costs, free the time of your on-site staff for more important tasks, and expand your resources. The key, however, is managing these remote employees successfully. Consider the following best practices.

Set Expectations

Just like on-site workers, remote employees need to understand what you expect from them. At minimum, take some time before every project to outline measurable goals and expected results. You don’t have to give your remote team step-by-step instructions for the job—though you may choose to do so in some cases. Often, it’s best to allow them to develop their own methods.

Communicate Regularly

It can be all too easy to neglect team members you don’t see or interact with every day. Make a point to touch base with your remote workers on a regular basis. Depending on your business, their role in it and the project at hand, this might mean twice-weekly emails to check on status, a weekly phone call to answer questions and discuss progress, or even video chats.

Don’t Rely on Email Alone

You’re busy, and so are your remote workers. If an email thread is expanding exponentially, save everyone some time and connect on the phone instead. An interactive verbal discussion is often a faster way to collaborate than back-and-forth email messages. You might even want to use an instant messaging platform for faster written discussions.

Find Ways to Interact Face-to-Face

While it’s not always possible—especially if your company’s remote workers are in other geographic areas—try to find ways to meet with them face-to-face. Invite those who live nearby to attend staff meetings, on-site trainings and teambuilding activities. If you travel to a city in which you have remote employees, set up a coffee or lunch date.

Be Considerate

One of the reasons many professionals value remote work opportunities is because they enhance work-life balance. Unfortunately, one of the quickest ways to destroy that balance is to disregard the difference in time between yourself and your remote workers in other states and/or countries. Pay attention to time zones and reach out to colleagues during their normal working hours whenever possible.

Make them Feel Valued

They may not work on-site, but that doesn’t mean they aren’t important. Keep your remote team informed about the latest company happenings. Let them know how their contributions are contributing to the organization’s success. Ask them for their opinions on decisions that may affect them. And always make sure they get credit for their work.

 

 

The difference between being a leader and a boss is more than simply the word someone uses to describe a supervisor. Employees perceive a leader and a boss in completely different ways, and leaders are far more effective than mere bosses, who often appear stuck in the 1950s, although they may view themselves as progressive. If you’re not sure about your management style, here are three quick questions to help determine how your employees see you — and what you can do keep from falling into the trap of ineffective management.

Do you do more talking or listening?

While no one expects you to be the guru on the mountaintop who gives succinct one word replies to problems, whether you spend more time telling others how to do their jobs or listening to their ideas makes a huge difference in how you are perceived by your employees.  Author and venture capitalist Allen Hall points out that those supervisors who presume to have all the answers are perceived as arrogant by employees. On the other hand, if you spend time listening to your employees, becoming familiar with their ideas and concerns, you will be respected and are likely to experience both personal and professional growth.

Do you tell people what to do or ask them what they can do?

If you have seen the now iconic film “Castaway,” you may remember Tom Hank’s character yelling at his employees to get the job done on a precise schedule. The employees, bored and rolling their eyes, lackadaisically follow suit.

If you’d rather be perceived as a leader than a boss, try letting your employees know what needs to be done and then asking them how they believe the task can best be accomplished. When you allow people to provide input into a process, they are more likely to be personally invested in the outcome. In addition to getting better employee performance, your workers will perceive you as thoughtful rather than dictatorial.

Do you criticize or coach?

While there is always a place for constructive criticism, telling an employee “You spend too much time talking and not enough time researching leads” is not as helpful as working with the person on time-management skills and goal-setting. Criticism sends the message that you are displeased with a person’s work, whereas coaching lets her know that you value her contribution and want to help her to be even more effective.

Most business managers and owners are well aware of the threat of loss from outsiders, and use a variety of methods to reduce this risk.  From locks on the doors, to security guards and dogs, to complex electronic burglar alarm systems, many preventative steps are taken.

However, it is often the case that less attention is dedicated to reducing the risk of theft by an insider. No one wants to believe that an employee will purposely defraud the company of money. Most people want to trust their employees, and rightly so.  But it only takes one bad apple to do significant damage.  Depending on the person’s position within the company, and the length of time the theft continues, substantial losses can result.  Business owners often have a tendency to believe “it can’t happen here.” Unfortunately, employee fraud is quite common.  Furthermore, no risk reduction measures can be guaranteed to keep it from ever happening or detect every instance.

Having said that, loss control experts recommend two general approaches to reducing vulnerability to theft by insiders:  measures to decrease the probability that employees will commit the crime, and measures to increase the perceived probability of discovery and punishment.

Below are seven tips to help with both approaches:

• Institute an anti-fraud policy.  Many employers wrongly assume they don’t need to discuss insider theft, since their employees know it is wrong.  But experts say a strong, written anti-fraud policy, published in the employee handbook and/or posted on employee bulletin boards, helps prevent insider theft.  The written policy reinforces the employer’s intent to maintain an honest, ethical environment, as opposed to one where it is regarded as common practice to steal from the employer.
• Ask employees to report suspected fraud, and provide guidelines for reporting fraud.  Employees need to understand how to report any suspicion of fraud or theft.  Honest employees will usually report fraud when there is a good policy for doing so.  They are more likely to say nothing, if they are not sure how to report the suspicious behavior of a co-worker.
• Maintain a business climate of loyalty and trust.  Expectations influence behavior.  When you expect employees to steal, some are more likely to do so, reasoning that there is no point in behaving honestly if you are already suspected of being dishonest.  Maintaining an atmosphere in which employees feel trusted and valued and are rewarded for loyalty helps prevent insider theft.
• Encourage ethical business practices.  The typical employee thief is often a first-time offender who rationalizes his or her behavior to avoid having to face up to their criminality.  Employees who have a weak moral character are more likely to act on it in an environment where they see the business engaging in unethical practices.  When the company promotes and rewards ethical business practices, the risk of insider theft goes down.
• Compartmentalize job functions.  When the same person both approves and pays invoices, it is especially easy for a dishonest employee to submit bogus invoices and then pay them.  Compartmentalizing duties helps to prevent this type of scheme.
• Ask your accountants to look for red flags that could indicate fraud.  Among the methods accountants often recommend are accounting controls, built-in detection mechanisms, and reconciliation of records.  Businesses increase the probability of discovery with frequent audits that include steps to uncover fraud. Make sure that accountants understand that you view the discovery of insider theft as an aspect of their duties and services.  Utilize your accountants to survey either all employees or randomly chosen employees from time to time, asking whether they are aware of any misappropriation of company money, property, or resources.
• Look into any tips about employee fraud.  Many dishonest employees are first brought to their employer’s attention as a result of a tip from an unhappy spouse or significant other.  These tips should be investigated objectively.  Sometimes employers ignore such tips, because they trust the employee in question, only to find out later that the tip was accurate.  In such cases, the amount of the theft could have been lessened by taking the initial tip seriously.

In summary, to reduce the risk of insider theft, the employer’s position should be one of trusting employees in general not to steal, while at the same time being proactive about measures to help keep workers honest.  Most employees will never engage in schemes to defraud, but unfortunately, there are always some who will.  The dishonest employees are often the very people the employer would be least likely to suspect.

Whether you’re a small business, medium-sized organization or non-profit group, one thing is for certain: there are numerous fraudsters—both online and off—who would be happy to relieve you of your money. Fraud directed towards small businesses is so common, in fact, that the Federal Trade Commission (FTC) has produced a free booklet (available for order here) outlining the most common tactics. The following scams are included.

Directory Listing Scams

If you receive a phone call from a business to “verify” or “confirm” your company’s information for listing in a business directory, you may be experiencing one of the most common scams. Fall for it—and provide the information the caller requests—and you’re then likely to receive invoices for listings in directories that don’t even exist. If the employee who pays your bills doesn’t realize the invoices are fraudulent, he/she may simply cut a check. You’re then out hundreds of dollars.

In some cases, when small businesses refused to pay these phony bills, the fraudsters proceeded to send fake collection notices and make threatening calls about late fees and penalties. They may eventually offer to “cancel” the listing—sometimes for a fee—but will then send more bogus invoices from a different company name. They may even sell your company information to other scam artists who will do the same.

Unsolicited Supplies Scams

If you’re running a business, you need office supplies. However, unless you have a formal ordering process in place, your employees may not always be able to confirm what they should be receiving. Some scammers take advantage of this by sending boxes of unordered merchandise to small businesses. They may even send empty boxes and then call to “verify” the delivery. If one of your unsuspecting workers acknowledges the receipt, you’ll then receive invoices and demands for payment.

URL Scams

These days, many consumers make purchases—or at least research their options—online. As such, your website is a vital marketing tool, and you don’t want to lose it. Scammers know this, and some will call your office (or send emails) claiming that your web address registration is set to expire if you don’t make an immediate renewal payment. If the employee who pays your bills doesn’t realize this is a fraud, you could be out hundreds of dollars once again.

Charity Scams

Consumers like businesses that care about their communities. Again, scammers are all too ready to take advantage of this. They make fraudulent calls claiming to be with local fire fighters, veteran’s organizations, police departments or schools and ask whoever answers the phone to make a donation or buy space in a charity publication. They then take the money and disappear.

Fortunately, there are steps you can take to help your business avoid these and other common scams. These include training your staff to verify everything before writing checks or giving out credit card account numbers, implementing a formal purchase ordering system, inspecting all invoices received, and reporting fraud attempts to the FTC. You can do the latter at ftc.gov/complaint.