One of the most serious threats to the success of a small business is employee theft. The Association of Certified Fraud Examiners estimates that the typical business will lose an average of 6 percent of revenues from employee theft.

How is it possible that a business owner could not have known their employee was stealing from them? Situations like this happen all too often, and in fact, this happened to a client of mine that is a commercial construction company. What we found is that the crime was committed by someone you would have never suspected and this case it was from a long standing employee.

Without breaching confidentiality here are the facts:

  • Trusted employee of over 20 years.
  • Position: Accounts Payable Clerk
  • Encountered financial difficulty with an alcoholic and drug abusing husband.
  • Setup a ‘dummy’ company to generate false invoices- with a real EIN tax number.
  • Started small at first- $50 or $100 with the ambition of paying it back later. Ultimately embezzled over $200,000.
  • We found that the City and County Attorneys were “too busy” to prosecute this ‘White Collar Crime”.  We later concluded that City and County Attorneys were simply telling us that the business owner, “should have known better”.

While we all like to think the best of our employees, it’s critical that you have policies and procedures in place on how you handle money. If you don’t have proper controls in place, you’re just inviting trouble. So, what should you do to ensure that you have controls in place to minimize the opportunity for embezzlement at your company? Here are some tips:

1- Don’t leave cash or credit cards lying around in an unprotected spot. It can easily disappear, and you don’t want to tempt people by being careless.

2- Don’t use signature stamps for checks. They’re too easy to misuse. Sign the checks yourself with a pen.

3- Minimize the number of employees who have signature authority on your bank account. On amounts over $1,000 you might consider Two Signatures Required.

4- Make deposits nightly so that excess funds aren’t left onsite.

5-  Rotate your staff via cross-training so that multiple people know multiple functions. This means multiple people will have the ability to do audits on each other’s work to ensure that processes are followed. It also minimizes the chance of theft. You may also want to pull in your outside accountant or CPA to do spot checks from time-to-time.

6- Have separate check cards for each individual. You want to know exactly who’s spending what. Remember, embezzlement isn’t just about taking cash. Employees often misuse credit cards to purchase personal items.

7- Have a close relationship with those key employees who handle your cash and bank account.  This offers some protection for your company because it can dissuade people from stealing- they won’t want to hurt someone they care about.

8- Do a background check on your employees when hiring them to see if they’ve had financial problems in the past. It may be a sign that they’re struggling financially and might be tempted to take resources from the business to resolve personal financial problems.  Feel free to conduct further background checks on existing employees to see if any problems can be detected.  Make certain your employee agreement and/or employee handbook allows for you to take this action.

9- Be aware of ‘life style’ changes with your employees.  The commercial construction company owner noted later that the embezzler drove a nicer and new car than his, wore trendy and expensive clothes, always had expensive haircuts and manicures, had a new boat, had a second home in the mountains.  All this for someone making just $40,000 per year.

10- Any person handling money, checks, credit cards or banking transactions, must take a continuous 2 week vacation.  During this vacation they are not allowed into the office, nor conduct any business in your behalf.  Be sure to lock them out of your database, so they have no remote access to any sensitive files.  Often times, questionable items will rise to the surface during this 2 week period.  If there are any further suspicions, bring in a bookkeeper or CPA to do a quick audit.

11- Institute a proper division of responsibilities. Assigned these responsibilities to different people to help provide a checks-and-balance function at your company:

  • Preparing checks for payments
  • Receiving payments from customers
  • Making bank deposits
  • Signing checks
  • Doing bank reconciliations


Due to the fact that no legal authority was willing to prosecute the embezzler, the owner and his CPA issued her a 1099 for the entire amount of embezzlement.  The IRS performed an audit on her and then paid her a personal visit for past due taxes and penalties.  In the end she lost everything, but in turn so did the business owner.



“Find something you love to do, and you’ll never work a day in your life” – Harvey MacKay

I am working with a client, that after 30 years of owning his business asked me, “Do you know anyone that would be willing to buy my business?”  Followed by, “I wonder if Starbucks is hiring right now?”.

After a number of years being an entrepreneur and assuming all the challenges of the business, it is hard to become “just an employee”.  I personally know of many business owners that are either: 1– putting their money back into the company; or, 2– taking a minimal salary, of less than $24,000 per year.  When you are making only $24,000 a year, a $60,000 per year job with a regular paycheck and benefits looks very inviting.  But remember one thing . . .  a JOB means . . . . Just Over Broke.

For those of us who haven’t been blessed with the perfect company, perfect employees, perfect customers/clients and a wonderful cash flow, the best option is to undergo an Alignment Process to explore what you really want to do.

Start the Process here:

1-    Write down what you like to do and what you don’t like to do.  The next step is to prioritize what you are really good at and what you not good at it. Take a close look at entire list and begin to shift your thinking and actions towards what you want.

2-    Develop and document your ‘dream business’.  Include what you do day-to-day, your dream employees, the ideal product or service, and the vision of this business. Now that you crafted a picture in your mind, the organization starts to take shape and becomes clearer.

3-    Visualize a day in this new company. Document your vision and expand it and turn it into a BHAG (Big Hairy Audacious Goal). My BHAG is to charter a private jet and load up my golf buddies and spend an entire week playing Pebble Beach, Spyglass Hill Golf Course, The Links at Spanish Bay and Del Monte Golf Course. Everyone should have a BHAG, so what is yours?

4-    Get open and honest feedback from those that you consider your most trusted advisors. Ask these people, “What should I be doing with my business and career?” You may be surprised by their answers. You’re not obligated to follow their advice, but the answers you receive may help you start the self-discovery process and lead you to uncover areas you never considered before.

5-    Know your interests and passions. It is not uncommon for many of my clients to have a vague idea about what interests them but confusion over whether this idea can translate into an actual business.

6-    Do a lot of intensive research.  Start by asking people how they created a unique role for themselves in their business and passion, investigate possibilities on-line to see what businesses are doing that fit with what you like, and research how they are good at doing this.

7-    Lose the negative thinking. Most people already know what they want to achieve and pursue at a deep level. This should be reassuring, but, unfortunately, they believe they don’t know this answer. Don’t be constrained by “should”, “would”, “could”, or “can’t”.  All these words express and reinforce fear or lack of confidence.

8-    Give yourself permission to start thinking outside the box. One client of mine was a full partner at a large law firm, with over 30 years of being the best in an area of law.  His dream was to write books for the needs surrounding the aging “baby boomers”. But first he needed to give himself permission to do something very different from what he had been doing. Although the lawyer had no prior experience writing books, he had all the necessary skills and resources to pursue his passion, which later became his business.

What you choose to do deeply impacts who you are as a person. It is one of the most personal statements you can make to the world at large. Embarrassment and fear of not meeting others’ expectations are the main culprits keeping people from uncovering their true path. There are no simple or easy answers, but the questions to help you in your journey are relatively simple. What do you really want to do? Why aren’t you doing it?  What is really holding you back? Spend some time examining these issues. And then get unstuck and work at what you love.

As a Leader, how well do your ‘KNOW’ yourself?

“We know what we are, but know not what we may be.”   Hamlet, William Shakespeare.

At some point you finally realize that you are the leader. For many of us, this is a huge realization, because as the leader you are now ultimately accountable for all facets of the business and ultimately the success of the business. Being a leader means others are following you. It also implies that you know where you are going and people trust that you do the right things, the right way, at the right time. Lastly, they trust that you are capable to making all this happen.

What’s “In” You?

The word “leader” doesn’t refer to the actual task involved, like “plumber” or “programmer” or “teacher” or even “manager”.  Rather, “leader” evokes qualities such as: vision, wisdom, mentor, strength, integrity, confidence – all traits that we tend to associate with great leadership.

So if leadership is about the person, not about the work that person does, then as an effective leader you need to know yourself and to continually develop yourself to be more of that person – the Leader – you want to be.

In the book The Leadership Challenge, it was written, “The quest for leadership is first an inner quest to discover who you are. Through self-development comes the confidence needed to lead. Self-confidence is really awareness of and faith in your own powers. These powers become clear and strong only as you work to identify and develop them.”


What are you looking for in this quest for self-knowledge? While there are many possibilities, these challenging steps guide you as dig into a better understanding of yourself.

1. Know and document your personal values and beliefs, and those of your company

Values are ideals, qualities, and entities, that people consider desirable in themselves and others; they are the things that are most important to us and how we are ‘hard-wired’. Beliefs are ideas that you have accepted as true, whether or not they can be proved. One person may believe very strongly that an assumption is true and another person might argue, just as convincingly, that it is not.

While values and beliefs are not identical, they are very related to one another. Knowing and stating clearly what values and beliefs you hold, gives you important insight into your motivations – and subsequently why you act the way you do. It also gives you further clarity in effective communications with others.

2. Awareness of your assumptions

An assumption is something supposed, and something taken for granted. An assumption is like a belief, in that it is perceived as the truth, even though it is not known for sure whether it is true or not. We are often not aware of the assumptions under which we operate.

Your challenge is to become aware when your actions or reactions are the results of assumptions, and then be willing to find out if these assumptions are correct or not. When you learn to question your assumptions, you see other people differently and you become more competent and focused in your actions.

3. Understand your impact on others

Impact is how you make other people feel. It happens by the way you look, the way you talk and listen, the way you respond, your physical presence, even by what people have heard about you. By seeking to understand your impact on others you can learn more about yourself and relationships around you. This makes you a better leader, and a better person.

4. Recognize those “hard” things – and overcome them

There are some things that are just plain “hard” for you, and you’ve probably become expert at avoiding them. You may be so good at it that you don’t even realize when you do it. You may call them weaknesses, inabilities, or your “nature”.

What kinds of things? Things like delegating work to others, telling employees that you’re unhappy with their performance and why, and speaking in front of large groups of people. Start by facing those “hard” things that are preventing you from achieving what you really want. When avoidance of those “hard” things becomes habitual you ultimately lose the ability to choose. When you give up your ability to choose, you relinquish your ability to make decisions, and take the “right action” – this seriously damages your effectiveness as a leader.

5. Embrace the unknown

Being in the unknown is uncomfortable. You don’t have all the facts. You don’t fully understand what’s happening or you are not sure what will happen next. It means you’re not the expert and others may know more than you. Effective leadership views the unknown differently. It’s okay not to know. It’s okay not to be the expert. It’s okay to ask other people’s advice and opinions. If you’re the “expert”, you miss new information and ideas.

10 Ways to Grow Your Business

As most of you are aware, I am a huge fan a Jim Collins, business author of Good to Great.  During a recent Fortune Leadership Summit in Atlanta, Jim listed 10 items necessary to become a ‘growth company’:

1- Change “what” questions to “who” questions

For example, hiring great people may seem like a routine task, the fact remains that many companies do a very bad job of hiring. The “great” companies all appeared to hire “great” people without specific roles (the What). That is, they did not create positions and then fill them.  Instead, they found great people (the Who) and asked them to stumble around the organization until they found the best use of their skills.

2- Double your question to statement ratio

Check your questions to statements ratio and set a goal of doubling it in the next year. Most people seem to be more interested in being interesting than being interested. So, begin by focusing on probing and intelligent questions and become more interested in the person you are communicating with, than yourself.

3- Embrace the “Stockdale Paradox”

The Stockdale Paradox is named after admiral Jim Stockdale, who was a United States military officer held captive for eight years during the Vietnam War. Stockdale was tortured more than twenty times by his captors, and never had much reason to believe he would survive the prison camp and someday get to see his wife again.  Stockdale said,  “I never doubted not only that I would get out, but also that I would prevail in the end and turn the experience into the defining event of my life, which, in retrospect, I would not trade.”

What the optimists failed to do was confront the reality of their situation. They preferred the ostrich approach, sticking their heads in the sand and hoping for the difficulties to go away. That self-delusion might have made it easier on them in the short-term, but when they were eventually forced to face reality, it had become too much and they couldn’t handle it.

Stockdale approached adversity with a very different mindset. He accepted the reality of his situation. He knew he was in hell, but, rather than bury his head in the sand, he stepped up and did everything he could to lift the morale and prolong the lives of his fellow prisoners.  In other words, retain faith that you will prevail in the end, regardless of the difficulties. AND at the same time…You must confront the most brutal facts of your current reality, whatever they might be.

4- Discover your “Hedgehog”

Clearly define what are you are both passionate about and best at doing. Once you find your hedgehog, then you apply focus and a laser-beam like precision to your goals. You ignore what other companies might see as an ‘exceptional opportunities’ because these projects did not fit with what you do best.  Continue to define and refine your hedgehog over time to produce extraordinary results.

5- Be clear your Core Values, Purpose, and BHAG

Commit to a set of core values that you will want to build your enterprise on, without changing them, for 100 years. For example the manufacturer Honda, has a 100 year Business Plan.

Set a 15 to 25-year Big Hairy Audacious Goal (BHAG). This is a goal that is concrete enough, and ambitious enough, to guide your company’s progress for years. Sam Walton (Wal-Mart) set his BHAG to “make my little Newport store the best, most profitable in Arkansas within five years.” He continued to set BHAGs, which continued to get larger and more audacious, as his company grew.

6- Establish a 20 Mile March

Commit to a “20-mile march” that you will bring you to your Big Hairy Audacious Goal. If you’re on a 2-mile march, says Collins, you don’t bolt 30 miles ahead when the weather is good. Even when the weather is bad, you don’t sit inside and complain – you still have to make 20 miles every day.  The 20-mile march is a metaphor for the milestone that you can reach day-in and day-out.

7- Create a “Stop Doing” list

Start by making a list with two columns.  The left column, are those things you “Are Doing” and the right column are those things you want to “Stop Doing”.  Assign a value to each activity and those activities which are lower value and lower skill delegate to someone else or delete.

8- Turn-off electronic gadgets one day every two weeks

Turn off your all your gadgets and create regular ‘white space’ for clear uninterrupted thinking.  In today’s environment, when have you set time in your schedule for strategic planning with NO interruptions.

9- Focus on getting a huge return on your next “Luck Event.”

Both great and mediocre companies encounter the same amount of luck, good and bad. What matters, is how well they’re able to capitalize on the luck.  Have you turned your bad-luck events into a big part of what makes your company great? Or, are you squandering your good-luck events?

10- Strive to be useful

Ask yourself the question, “Would the world miss you if you/your company were gone?”