Small businesses everywhere face an increasing number of cyber threats nowadays. With many companies taking advantage of cloud-based data management solutions, a variety of social media marketing channels, and digitizing many of their services, their cyber risk exposure grows unless they maintain constant vigilance about their security.
When a cyber attack hits, unprepared small businesses may face severe business disruption, be subject to regulatory penalties for failing to uphold proper data protection policies, see customer trust erode in droves, and various other long-term issues.
This short article explores the impact of data breaches on small businesses and how company owners can prevent them from damaging operations irreparably.
The Scope of the Problem
Opportunistic cybercriminals tend to exploit small businesses because they are seen as ‘easy targets.’ Small businesses often deploy less robust security measures and, despite the importance of proper cyber incident response etiquette, they regularly fall victim to devastating types of cybercrime.
Three-quarters of cyber incident victims are small businesses, according to a recent Sophos report. The average cost of a data breach with fewer than 500 employees is $3.31 million, according to IBM’s 2023 Cost of a Data Breach Report, and 95% of cyber security incidents at small businesses cost between $826 and $653,587.
These sobering statistics illustrate just how important small business cyber security is. So, let’s review what can happen if small business owners ignore cyber security.
1. Fines and Penalties
Not only can cybercrime, such as ransomware, grind operations to a halt until a large sum is paid, but there is no guarantee that data will return to its state before your systems were hacked. Therefore, not only could you be down substantial amounts of time and the cost for data restoration (to the extent possible), but the loss of data could result in regulatory fines, legal fees, extensive system repairs, and forensic investigations to uncover the cause of the breach.
The loss of business during extended downtime, the knock-on effect on operational efficiency, and the loss of sensitive intellectual property can also have an indirect effect on your company’s cash flow. As small businesses tend to lack the financial capital to absorb these costs en masse, it’s imperative that extra vigilance is paid to preserve data integrity.
2. Reputational Damage
Small businesses have to maintain a closer relationship with their customers than ever. In an age where social media transparency and real-time communication are crucial, news of a prolific data breach can spread like wildfire.
If found to be the victim of a data breach, a business could see its sales plummet and a widespread downswing in customer trust. The negative press associated with a data breach could make reparations not only costly but futile; businesses could find it a constant uphill battle to attract and retain new customers who are more conscious about preserving their data.
Rebuilding a damaged reputation takes time, effort, and patience, and while not impossible, presents a formidable challenge for small business owners with stretched resources.
Checklist to Prevent and Manage Data Breaches
While it’s easy to look at the evolving cyber threat landscape with disdain and pessimism, there are some crucial steps that small business owners can take to reduce their risk, minimize potential damage, and safeguard their reputations.
- Use strong and reliable antivirus and firewall solutions with robust patch management processes to keep systems and networks thoroughly protected.
- When using cloud-based solutions, mandate that all users have strong, unique passwords for each login.
- Back these credentials up with reliable multi-factor authentication (MFA) to verify their login attempts.
- Establish and regularly reassess cyber security, data protection, and incident response policies in light of evolving threats.
- Ensure that all internet-based resources offer secure encryption between channels with SSL/TLS configurations intact.
- Implement secure and regular backups (both offsite and cloud-based) for data and critical systems. These should be tested regularly.
- Take out reliable and inclusive cyber security insurance that covers data breach costs and responsibilities.
- Engage with third-party cyber security specialists for audits and risk assessments to determine vulnerabilities in infrastructure.
For more information, look at SCORE’s The Small Business Guide to Cybersecurity.
Conclusion
It’s no secret that data breaches can have a profound impact on any small business, regardless of sector or workforce size. This guide only scratches the surface as far as their impact is concerned, which is why it’s crucial for business owners to stay informed of emerging threats to guide their defenses and keep their workforce data safe.
Remember that cyber security is never a one-and-done practice; it’s an ongoing process that requires you to adapt and evolve your business to stay ahead of the malicious actors lurking throughout the internet. But by building a robust baseline level of defense you can significantly reduce your attack surface, maintain your market position, stay competitive, and safeguard your and your customers’ data with confidence.
