The Steal | BCBusiness
Lori Joyce and Heather White learned the hard way just how important it is to keep your eye on every corner of the field
Back before the franchising and the Cupcake Girls reality TV series, Heather White and Lori Joyce were just budding entrepreneurs with a single shop on Denman Street. They opened the first Cupcakes in 2002 with a small staff. One employee—a single mother whose teenage daughter also worked at Cupcakes—had worked her way up from the bakery to an administration position. “We had her doing our banking and general bookkeeping,” Joyce says. “She was working directly beside me. It was a personal relationship—we went out of our way to help her. Every Christmas we’d all contribute to a gift basket for her.”
“When you’re a retail startup, cash is king,” Joyce says. “Every day relied on cash and making bank deposits.”
When discrepancies began turning up, suspicion fell on other employees—at least one was let go. “She was the one who reported the shortages,” Joyce says. “She would have been part of those conversations.”
But she was skimming. “When she didn’t get caught, it got bigger. Over six months she stole $7,500.”
Eventually the woman confessed. “She said she took overages and intended to pay it back,” Joyce says. “But no one noticed and so she thought, ‘I got away with it.’”
Kalpna Solanki, CEO and founder of FX Foods, still doesn’t know who’s been stealing her product. Her company, FX Foods, makes Marvin’s Marvelous Naturals, a line of gluten- and nut-free crackers, cookies and granola. About 25 per cent of her approximately $500,000 annual revenue is international, and one of her best overseas clients is Cold Storage, the large Singapore grocery chain. On two occasions shipments to Cold Storage have not arrived intact. “Each level of a pallet has 16 cases of product,” she says. “The top two layers of each pallet were gone. We don’t know where it disappeared along the way.
“We’re looking at options for securing the shipment better. We’re looking at switching shipping companies. But they’re the same company we use for shipping to Mexico and the Emirates as well as to Singapore, and it’s only the Singapore shipments that have been affected.
“We take photos and we do a count when the driver picks up, so we know the product has been shipped,” Solanki says. “But tracing it along the way is not possible.”
Having failed to determine the source of the theft, Solanki is faced with the difficult decision of whether to cut their losses by dropping the client. “They are really good customers, but we have to decide whether it’s worth it.”
As for Cupcakes, now with 11 locations and projected 2014 revenues of $5.5 million, they have changed the way they do business. One employee will never have that much control again. “I blamed myself for not having systems in place,” Joyce says. “So it became a two-person job. [Employees handling cash] are directed now to our controller. It’s now a direct relationship between the controller and the signing authority. And just being more organized. If you’re only reviewing it weekly and not daily, it’s easy to get away with. It was an eye-opener.”