Small business owners face challenges separate from their larger counterparts that make them more vulnerable to scams.
Last month, a telemarketing scam based in Montreal targeted small businesses in Ottawa, they promised to improve companies' online presence. The caller would ask for a mailing address, saying the company would send a package that explains the services available. But the package came with an invoice for $500, for services not asked for or received.
A business owner targeted by this scam, Emily McDonell, who owns an Ottawa boutique, says she endured harassing calls from the scammers, who threatened legal action. She eventually paid the invoice by credit card. She only cancelled the payment after she called an online security expert who recognized this as a scam and they broke this story with the CBC to help prevent others falling prey to the same scam.
Small businesses are identified as having fewer than 100 employees, according to Statistics Canada. The agency reported in July 2012 that there are more than 2.4 million businesses in Canada, with more than 1.1 million of those being small businesses.
“A big part of making sure a business owner does not fall prey to a scam is due diligence,” says James Stock, a third-year business and commerce major at Carleton University. Stock says his program does not discuss in much detail how to verify the validity of an outside company that a business may pay for services. Rather he sees this as a soft skill that has to be dealt with on a case-by-case basis.
When trying to avoid being swindled, small businesses are at a disadvantage. Larger businesses have more resources, whereas small businesses may look to hire outside companies for services, such as strengthening their presence online.
“When you have a small business and resources are really tight, you have to be very particular about where you concentrate your time and money,” says Stock.
In his program, business law is a mandatory course, and Stock says they examine how to protect a business, especially through having proper insurance and incorporating a business (registering it as its own entity), which helps owners with costly legal expenses.
Not every person who gets into business attends business school. This can be a challenge for business owners who may not know everything about protecting their company.
To help business owners, the Canada Revenue Agency provides an online guide for small businesses, offering information on getting started, business terms and definitions, taxes, audits and available help and services.
The RCMP also provides tips online for spotting and reporting telemarketing fraud.
The Canadian Better Business Bureau provides standards and accreditation for businesses. It also offers a variety of programs and resources.
The concern is that businesses are still becoming victims of scams, and ensuring they make use of the resources available is crucial.
Small business may be intimidated by scammers; they may also be more easily tricked than owners of large businesses because they have fewer resources to check the legitimacy of services to which they are outsourcing.
Business owners have to protect themselves and their companies by knowing what help is available for them, and similar to the situation last month, reporting any scams as quickly as possible so that other small business may also defend themselves.
Owners of small businesses can help themselves and others by reporting any scams as soon as suspicion arises. This would encourage sentiments of good will and support for businesses with fewer resources. The sooner a scam is reported, the sooner it can be avoided by other businesses.
Small business owners must not assume that everyone who offers services is genuinely out to help them. Rather, they have to take the necessary diligent steps to avoid being taken advantage of.