Adequate personnel screening is viewed as the initial step in loss prevention. Personnel departments should check references; they should use applications that authorize the employer to investigate information and that specify appropriate disciplinary actions for misrepresentation; and they should use a bond application as a quality control check on the original application. Appropriate staffing and employee training can also decrease losses. To combat the potential security hazard of opening and closing a small store, management should consider trading a full-time hourly employee for an additional salaried employee, including key control in opening and closing procedures, and staffing stores with more than one person. Internal controls can be improved through daily sales audits and effective management control of cash. Employee theft and related internal problems--generally recognized as the greatest cause of shrinkage in all businesses--can be deterred through defined personnel policies, prosecution, overall internal controls, access control, effective personnel selection and screening procedures, and employee education and awareness. A strong shoplifting policy with prosecution as a key element should be developed. To sum up, key elements in loss prevention for small chain stores are individual store management responsibility for shrinkage, security training and awareness, sufficient customer service, and internal controls. Reporting form exhibits are given.