Be Trusting, But Not Too Trusting

The wisdom of the holiday classic “A Christmas Story,” applies to business as well: When all is most right with the world, disaster strikes.

Consider the case of Apple. First, the company’s iPhones and iPads are the hottest sellers since the Hula-Hoop. Then along comes antenna-gate with the iPhone 4, and news that an Apple employee has been accused of taking kickbacks from Asian manufacturers of the company’s gadgets.

Paul Shin Devine, a global supply manager, has been indicted on offenses that include wire fraud, money laundering and unlawful monetary transactions. Apple has also named Devine in a civil suit alleging fraud and violation of racketeering laws.

Devine’s case, if he is found guilty, can be a lesson to entrepreneurs. You can be good at business and good to your employees, and still be damaged by a bad apple. In fact, it’s often when you’re doing your best that an unscrupulous employee can take advantage of you.

That’s the case the Wall Street Journal makes. It recounts the tale of one entrepreneur who was taken for a ride by his COO, who pocketed $300,000 meant to go to payroll taxes.

And that’s actually a pretty common problem for entrepreneurs. A lot of times, it’s in the nature of the entrepreneur to keep his or her eye on growing the business, not the administrative details that would lead them to catching a fraudster.

Another mistake often made is putting the same employee in charge of both receipts and company spending: In other words—being too trusting.

So here are a couple of tips for entrepreneurs. Don’t lose sight of your books, even when you’re focused on growing business. And don’t trust any one person too much.

It’s something both big businesses like Apple and small businesses can learn.