Are Counterfeits Threatening Your Business?

What if I told you there was a serious and rapidly emerging health hazard that is going to make some children and grandchildren, perhaps yours, seriously ill or kill them -- and then told you there was something you could [easily] do to reduce/prevent the chances of this happening? Would you be interested?

And what if I told you there was something you could [easily] do that would save the country billions of dollars and scores of lives each year? Would you be interested?

And what if I also told you there was something you could [easily] do that would cut down on terrorism in the U.S. and worldwide -- something that would make not only your airline flights, but using elevators and driving your own car much safer? Would you be interested?

Then what if I told you protecting ourselves from a dangerous health hazard, saving the country billions of dollars, and cutting down on terrorism were all directly related? Not only that, but all you need to do to reduce all of these threats/dangers involves a relatively simple solution.

Businesses strive to create brand identity. Part of building the brand is the company's ability to provide a consistent, reliable product or service. A cornerstone to a reliable product is sourcing product from a dependable supply chain. Sourcing from reliable trustworthy suppliers requires some due diligence. Knowing who your buying from is increasingly becoming more important with the internet being a prime source for procuring product. Savvy technical geeks are often times employed by criminal organizations, some known to be associated with terrorist groups across the world. They are able to capture buyers' attention through successful Search Engine Optimization campaigns. All companies including small businesses could be liable and subjected to financial and criminal penalties. For instance, an owner of an appliance store better understand the risk of selling toasters. Imagine the risks associated from supplying toasters that catch fire? Or if you're an interior decorator, realize that different manufacturers produce fabrics in different ways. Don't suggest fabrics that come from factories that don't follow the best flame retardant practices.

As an owner of Secure Components who supplies critical electronics to the Defense and Aerospace industry, it has become quite clear that new regulations apply to us. Recently, the Department of Defense (DoD) issued a final rule which impacts the Aerospace and Defense industry affecting the supply chain from big business down to small business. Businesses within the industry are now required to develop and implement counterfeit avoidance plans into their quality management systems. This plan helps to mitigate the risk of a counterfeit part infiltrating the supply chain. Additionally, this plan will help reduce the billions of dollars that are wasted in suspect or fraudulent parts. These risks are becoming more evident in other industries. A preventive action small business owners can take today is to become aware of the dangers of procuring online with the price being the ultimate deciding factor. As mentioned, the DoD has taken steps to hold companies financially and legally responsible for passing counterfeit parts in the supply chain. It's a matter of time before other industries start holding their supply chain accountable for these types of product reliability issues.

It's not only the small business owner that need to be concerned. Recently on a business trip to New York City, while walking on Canal Street, I bought cell phone chargers, kids' bracelets and sunglasses. Many people might think this is a safe way to share souvenirs for those at home? Well get this ...

1. The cell phone charger cost me $5. There were no safety markings or any markings whatsoever. It's been known that people have been electrocuted using lower quality counterfeit chargers. Usually there are product safety marks to look for.

2. Next, I purchased kids bracelets with wonderful bright colorful Disney characters; I had them sent to a test lab to test the toxicity. Of course the levels exceeded the allowed limits. My kids have everything in their mouths, why not a rubber bracelet?

3. Speaking of putting things in your mouth, realizing how often I end up holding my sunglasses in my mouth, I thought sunglasses would be another great product to test for higher toxins. Sure enough my $25 designer sunglasses exceed allowable limits.

As a consumer on the street or a small business procuring, Be Aware! Be aware of who you are buying from. Are they authorized? If not, additional required due diligence must be performed and documented. Be aware of the price you're paying. If it's too good to be true, it's probably too good to be true. Be aware of the risks associated with purchasing something if you're forced to buy outside the authorized distribution channel. Be diligent and ask questions. Ask to see documentation indicating that your vendor has taken the necessary steps to make sure that you are buying the intended desired authentic product.

For more information about the new regulations and how to avoid the dangers of buying a counterfeit please Click Here.

This blogger graduated from Goldman Sachs' 10,000 Small Businesses program. Goldman Sachs is a partner of the What Is Working: Small Businesses section.