Robert Hervajec Reveals How He Got Scammed By His Own Sales Manager: 'Look Out For Yourself In Business'

Robert Herjavec is a renowned cybersecurity expert and a celebrated star of Shark Tank US. His entrepreneurial skills and technical know-how helped him amass a personal net worth of £224.1 million ($300 million).

He founded several leading cybersecurity firms, scaled them to new heights, and sold them to global technology corporations and private equity firms. Herjavec's first breakthrough was in 2000, when he sold his internet security software integrator company, Brak Systems, to AT&T Canada for nearly £22.5 million ($30.2 million). He followed a similar approach over the last three decades, building and selling more companies to AT&T and Nokia.

Currently, he advises governments and enterprises on strategies to improve cybersecurity measures. At the same time, Herjavec has published multiple books and continues to invest in diverse businesses while mentoring budding entrepreneurs. He has reportedly invested over £11.9 million ($16 million) across 57 deals on Shark Tank.

However, Herjavec's journey as an entrepreneur wasn't without major challenges. In a recent YouTube clip, he shared that people have done 'horrible things' to him in business, be it rival companies or his own employees. He particularly recalled an episode in his first company where a sales manager defrauded the company of major deals.

You Have to Look Out for Yourself in Business

When Herjavec started his first company, he said that he had great employees and that the smooth business operations were helping the firm grow rapidly. Soon after, the company's head of marketing, Jennifer, quit for a different job.

While it appeared like a regular move to Herjavec, his perception about working with people in a business changed when Jennifer disclosed during the exit interview that a sales manager owned and operated a side company with a similar name. Moreover, that person funnelled deals to the side company.

Herjavec didn't immediately believe her because he thought he was too smart for something like that to happen. That illusion was shattered when he checked the deals the company lost and called one of those customers to understand why they didn't partner with his firm.

Herjavec was shocked to hear that the customer was under the impression they had made a deal with his firm. In reality, the sales manager would take an order for the Shark Tank star's company but the deals were actually going to the side company, which was fulfilling the contracts and cashing the cheques.

'The minute you hire the first employee, you have to be careful,' Herjavec said. He learned the hard way that as an entrepreneur, 'you have to look out for yourself.'

Top Signs That an Employee Is Committing Fraud

Employees involved in fraud could severely impact business reputation, hamper corporate culture, and even trigger financial and legal troubles for the firm.

According to experts, the first sign to look for is a sudden lifestyle upgrade without corresponding changes in income. An employee making extravagant purchases that don't align with salary levels might be a sign that personal expenditures are being financed using company resources.

Secondly, employees who resist sharing responsibilities, especially those related to finance, could be a red flag. Employees who avoid team gatherings or outings could signal techniques to lower the risks of getting caught. These traits to isolate activities often mean they are trying to retain control of their wrongdoings.

Even repeated financial discrepancies in accounting, missing documentation, and unusually close relationships with vendors could raise suspicions. Illicit activities involving vendors could be an employee seeking personal monetary benefits in exchange for awarding contracts or false invoicing.

Simple Ways to Keep Your Business Safe

The first thing business owners should focus on is educating employees about refraining from fraud, its related legal and financial consequences, and how to report any illegal activities. This critical step can be accomplished through fraud awareness campaigns, zero-tolerance policies, and enforcing an ethics program that prioritises accountability in the workplace and urges workers to abide by internal policies and protocols.

Encouraging an open-door policy for employees to raise concerns and segregating responsibilities to ensure transparency can go a long in scaling a business with growth potential. Implementing policies that mandate frequent financial audits and that vendor contracts go through a standard bidding process further minimises the risks of business fraud.

Creating a layered approval process for financial transactions and adopting technology to track employee behaviour that automatically flags unusual expenditures and withdrawals can also help nip fraudulent attempts in the bud.