Shrinkage: The old world business killer.
A friend recently told me how he lost millions to a business or supposed investment. I couldn’t stop querying what could have been responsible for the collapse of the business… the word that kept popping in my head is “SHIRNKAGE”. You might not have heard of the word, but it is a silent deadly killer of Nigerian businesses. The term shrinkage refers to ‘consumer theft’ or in pidgin, ‘obtain’, ‘shop lifting’. If for example you run a store, and you periodically notice several items missing, as a manager, you might tend to blame it on the ‘shop girls’ or ‘sales girls’ …”the pikin don steal my goods again”… and it comes with punishment or loss of job but might have been ‘lifted’ by ‘lift-shoppers’. Another way to look at the word ’shrinkage’ is employee theft. Instead of the employee recording N200, he records N198. If you want your business to survive, you have to be the eye and watchman for every moulding coin or ‘bankable note’. 40% loss of profit could be attributed to shrinkage in comparison to business incompetence and economic influences.
Some ways to prevent shrinkage
1. Camera: CCTV has helped so far reducing the percentage of cases to 80%. Install cameras!!!. When staff knows that there is hidden camera monitoring their progresses, they tend to compose and operate at their best.
2. Roam your business physically and remotely. How do you roam your business? The essence of accounting software running on web is to help track every part of the operations of your business. You are not there but you can monitor income remotely, visually and analytically.
3. Understand business enterprise architecture. Enterprise architecture enforces discipline and standardization of business processes. What is your business process?
4. Design your own business enterprise architecture. Because this is how it has been done doesn’t mean it is rightly done. Observation should lead to improvement and better automation.
Where your treasure is, there your heart will be.