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Home · Articles · Business Articles · When Profits Walk Away: How Much Are You Losing to Theft?

When Profits Walk Away: How Much Are You Losing to Theft?

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It was a lucky break that Joe Valdez, owner of Green Acres Landscaping, happened to glance back at his truck during a jobsite conversation with an employee one morning in Oakland, California. It was a lucky break that Joe Valdez, owner of Green Acres Landscaping, happened to glance back at his truck during a jobsite conversation with an employee one morning.

He was surprised to see two men helping themselves to his brand new, heavy duty weed-eater and putting it into their truck.

It was another lucky break that traffic was backed up. The truck drove off slowly, and Valdez, not ready to give up his new machine without a fight, was able to chase it on foot.

More luck: a police car happened to be driving down the street, and the officer inside had seen the whole thing. He chased the truck with his car while Valdez continued on foot. They caught up with one of the thieves running from the truck (which had also been stolen). In a scene straight out of COPS, Valdez and the officer chased the man down and 'wrestled him to the ground.'

While real life police drama is not an everyday occurrence for most contractors, theft is unfortunately all too common in the landscaping industry. It eats into the profits of nearly all companies big and small. And it happens on every level: from heavy equipment theft, to shovels that never return from the jobsite, to plants that somehow don't make it into the ground.

How much are you losing to theft each year? If you don't know, you're probably not paying enough attention. If a riding mower is missing from your shop, you're generally going to notice and take action. But many contractors fail to realize that the shovels, rakes, and hand tools that go MIA can, over time, cost as much as the mower.

Ignoring the issue of theft can be a serious mistake. Costs incurred by theft are much higher than the simple monetary value of the items lost. When you factor in employee downtime, project delays, rental costs, time spent purchasing new equipment, and rising insurance rates, costs add up quickly. Theft is an issue that most companies simply can't afford to ignore.

In the Eyes of a Thief, Small is Beautiful
Estimates show that millions of dollars in heavy equipment is stolen each year. But heavy equipment isn't the only target, or even the most desirable target, in the eyes of a thief.

"The biggest losses for me have been weed-eaters and gas hedge trimmers," says Valdez. "From talking with police, I've learned that small equipment is stolen more frequently because it's easy to carry and can be sold quickly. A lawn mower may be more expensive and bring a good price but it's heavy and bulky, whereas you can put a gas hedge trimmer on a bicycle if you want to."

"Don't discount the little things like shovels and hand tools," says Tom Stout, owner of Stout Landscaping in Los Angeles. "Those little things add up." Although Stout currently sub-contracts out all of the projects for his high-end design/build business and no longer owns his own equipment, he had plenty of experience with theft when his company previously ran a maintenance division. "The biggest things I had stolen were mowers and weed-eaters, but it seems like the things that only cost twenty or thirty dollars lost me the most money in theft."

Andy Mumma, president of Sunrise Landscape in Albuquerque, New Mexico, couldn't agree more. Before implementing an array of theft prevention strategies, Mumma estimates that his company was losing between ten and twenty-five thousand dollars in small tools per year.

Keeping Track of Theft Loss
Over the years, Mumma has become somewhat of an expert in theft prevention. "I've been a landscape contractor for twenty-five years," he says. "During that time, just about anything that could have been stolen from me has been stolen from me. Because of that, I've invested a lot in this issue, and it has definitely paid off."

There are many things that contractors can do to prevent theft loss. Providing more secure storage, increasing employee screening and education, registering equipment and insuring it are just a few of them. One of the most important places to start is also one of the simplest -- it all comes down to paying attention.

Carefully monitoring inventory is one of the most important steps you can take toward theft prevention. Tracking not only helps you to act quickly when equipment is stolen, it also helps you to easily calculate how much money you're losing to theft and where you need to take preventative action.

"When you're just starting out in a smaller company, it's easier to keep track of equipment," says Mumma. "Generally, the owner is on the crew and will notice right away if things are missing." But Mumma notes that as business grows, keeping track of equipment becomes more complicated. Theft loss can grow exponentially.

Developing simple, straightforward tracking systems at this time is critical. Sign-out sheets, inventory lists, and assigning specific equipment to each truck or crew are just a few examples of simple but effective tracking methods. The important thing is to choose a system that's easy for staff to follow and for managers to supervise.

"If you can have one person responsible for managing inventory, that's the way to go," says Stout. He also notes that equipment isn't the only thing that disappears. You should also have a way to keep track of fertilizer, planting mix, and plant material. "You need to have a plan for where each plant is going to go. I used to buy extra plants if I wasn't sure how many I needed. That extra stuff used to just get lost in the wind."

Design your storage with ease of inventory in mind. "In the landscaping industry there's a lot of specialized equipment that you may not use everyday," says Mumma. "If it's missing, you may not notice it for six months or so because you don't need it."

Mumma made sure to incorporate well-designed and clearly marked storage areas for all tools and equipment when his company built a new facility four years ago. "You know the adage," he says, "A place for everything, and everything in its place."

Permanently marking your equipment and keeping an updated list of serial numbers can discourage thieves and make it easier to trace items that are stolen. Heavy equipment can be registered with a national database like the National Equipment Registry (see end of article). You can protect your small equipment by marking it with its VIN or serial number and recording it in your inventory list. Mumma recommends permanently etching equipment in at least three places with the machine's identifying number and the company's contact information. "Make sure it's on the most expensive part of the equipment and also include it in a hidden or inaccessible place so it can't be easily removed."

Securing Your Profits
Of course keeping track of your inventory is only half the battle. You also have to secure it at the jobsite and on company grounds. "I've had a lawn mower stolen, line trimmers, chainsaws, and blowers," says Russ Griffin, owner of Private Greens of Nevada, a maintenance firm specializing in homeowners' associations. "Now I have enclosed trailers and keep them locked."

Many contractors keep equipment chained to their truck. "We started chaining our machines to the truck and we know that this has prevented theft for us," says Valdez. He and his crew have returned to trucks to find that equipment has been moved but not removed, evidence that thieves had made an attempt and failed.

Contractors use a variety of creative methods to secure their property. "Paint your equipment ugly colors," says Mumma. He's even tried this strategy with plant material. "We had a situation where someone was repeatedly stealing sod from one of our sites. So we painted it orange and they stopped stealing it. It didn't hurt the grass and it gave us two to three weeks to get it rooted in."

Security on the contractor's property is just as important as at the jobsite. Mumma's new facility includes video surveillance along with a high security fence with an automatic main gate. This not only discourages theft, it also provides security for employees who are working late or are on the property alone. The surveillance system also cracks down on internal theft and simple carelessness. "Now when an employee says he returned something, we can easily check to make sure," says Mumma. This system protects both the company and employees.

Employee Management and Education
Internal theft is an unfortunate reality in any business. Careful employee screening and management is key in the theft prevention story. "It's amazing how much you can lose with just one new hire," says Mumma. "We had a situation once with a new hire where we lost about $10,000 worth of equipment in just a few months." It took the company a while to trace the losses.

"You need to pay attention to who you hire, and who you trust with your equipment," says Griffin. "I had one employee who took a truck home and told me that it was broken into. Four pieces of equipment were missing, but there was no evidence of a break-in. He quit right after that incident."

In addition to honest employees, well-educated employees can be your best defense against theft. "You need to talk with your employees about theft prevention," says Valdez. "I tell my guys that if they are working in the back, have one guy work out front or pull the truck into the driveway. It also helps if they know how much the equipment costs. If they know how expensive it is, they take better care of it."

Valdez also cautions staff to be very careful on a new jobsite when there are several contractors working. It's very easy for equipment left on the jobsite to get picked up (accidentally or not) by another company's workers.

Mumma agrees that employee education is one of the most important theft prevention steps you can take. "We have weekly safety meetings and weekly general meetings. We use this time to reeducate and reemphasize theft prevention. We make sure employees know that the more we save in reducing theft, the more we can do for them. Some people don't think it's worthwhile to take this much time out for education. But for us, this is an investment that pays for itself day in and day out."

Theft Prevention Tips from the National Equipment Registry
The National Equipment Registry (NER), a group dedicated to increasing the recovery rate of stolen equipment and reducing the costs associated with theft, offers a number of services for business owners. Among them is heavy equipment registration. Equipment registration discourages thieves because it makes it easier to identify stolen goods. It also helps law enforcement track down true owners when items are recovered.

The NER provides educational materials on theft prevention. Here are a just a few of their recommendations:

• Make theft prevention part of your business plan and link it to employee incentives
• Allow time in the day for employees to follow theft prevention policy
• Invite suggestions from field employees about security and theft issues
• Maintain a list of people authorized to enter or leave a worksite
• Develop a good working relationship with law enforcement before theft occurs
• Keep a detailed inventory of all equipment at a given worksite
• Perform background checks before hiring new employees
• Make it clear to employees that theft impacts the bottom line and their own compensation
• Establish a confidential reward system for information leading to recovery of equipment
• Use see-through material such as chain link for fencing to make sure unusual activity gets noticed
• Place lights near the perimeter of a property and direct them inward

For many more tips on theft prevention, visit the NER website at www.nerusa.com.

 
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