Small businesses and large corporations operate on different scales with different budgets, different goals, and have access to different technologies. As a result, it can be easy for a small business owner to believe that their organization is immune to the dangers of cyber-attacks.
The cyber-attacks that are usually talked about through the media primarily involve large corporations. However, while it’s true that the attacks affecting large corporations are usually the incidents that make it onto the news, this also doesn’t mean that small to medium-sized businesses are safe.
In fact, research suggests that over 40% of online attacks are aimed at small and medium-sized businesses, and that percentage is increasing every year. This is because only 14% of SMBs are prepared to defend themselves with a sufficient cybersecurity infrastructure in place.
However, it would be unfair to compare the level of security between a large corporation to a small startup. The good news is that there are many ways SMBs can implement cybersecurity practices without breaking their budget. Here are five reasons why small and medium-sized businesses should be taking data protection more seriously and actionable ways they can protect themselves.
1. Data breaches are expensive
Hearing news regarding large enterprises being hit with a data breach and then seemingly continuing as if nothing happened can be misleading for small businesses. The truth is that data breaches can cost up to $3.8 million and the reason why a large enterprise can continue to operate after such a data breach is due to them having a significant amount of resources and a powerful legal team.
Investing in a security system that can cover potential attack surfaces and identify security vulnerabilities in all of your systems quickly while they are still running can give companies peace of mind that they are fully protected without having to use too many complicated tools. According to Cloud Defense, this is best made possible through eliminating shelfware, integrating with your existing security tools, and reducing the hundreds of manual hours spent on managing and combining reports from hands-on tools.
2. Data breaches hurt employee morale
Cybercriminals who target small businesses are looking to prey on a company’s lack of staff cybersecurity education and training. They use tactics such as phishing scams to trick exemplary employees into clicking on links that lead to terrible results.
When there is a breach, employees can also stop trusting each other and perhaps even themselves. Providing employees with sufficient cybersecurity technology and training can give them the practices and tools that they need to meet these threats head on.
3. Data breaches reduce customer retention rates
A company’s reputation has a direct connection to its ability to nurture and sustain customer retention rates. However, after a significant data breach, a stable customer base is disrupted, and revenue becomes more difficult to predict.
To prevent high customer loss resulting from a data breach, building a secure customer database can support brands to establish trust and confidence with their consumers. Especially during this time of uncertainty, customers want to know that the businesses they are buying from are ready to protect their personal information.
4. Data breaches damage reputations
When building and growing a small business, business reputation and brand identity are fragile. People want to support and buy from small businesses and trust them with their personal and financial information. However, if the company suffers a data breach, trust and confidence in that brand disappear immediately, and businesses lose their most loyal customers.
To reduce this risk, companies should only keep the information they need and ensure that all necessary files are kept encrypted. Minimizing the locations where private data is stored is another effective strategy for eliminating risk.
However, several online businesses (especially startups) often choose free versions and options of software due to budget restraints. The good news is brands don’t really have to pay a fortune for good digital solutions and tools either. Plus, going with the cheapest option out there just to save some money isn’t the best idea because it could end up costing even more.
Web hosts, for example, should serve as an online business’s first line of defense with essential security features such as access restrictions, network monitoring, SSL encryption, and malware identification and removal services. Yet many more affordable web hosts lack several of these features.
Gary Stevens, a web hosting security specialist from Toronto-based website Hosting Canada explains further, “If you go with a cheap web host, you may save money initially, but you’ll either have far fewer features, or you’ll need to purchase all kinds of upgrades and end up paying more anyway…these hosts often make millions while using very low-quality servers, which leaves them vulnerable to security breaches.”
5. Data breaches threaten legal action
Depending on the type of information an organization keeps, serious legal ramifications can be threatened in the event of a breach. This is especially true and more serious for financial and healthcare businesses handling extremely confidential information.
In recent years, businesses have been forced to spend tens of millions of dollars in class action lawsuits. The expenses of data breach lawsuits are often a lot more than what most small businesses can afford. Sometimes, government authorities may even restrict the company from carrying out its daily operations until legal investigations have been carried out.
Conclusion
If you are looking at the five reasons mentioned above and feel like there is a pattern to them, you would be correct. When there is a data breach and an organization does not take cybersecurity seriously, there is a domino effect of consequences. Ultimately, the best way for small businesses to protect themselves from the devastating consequences of a data breach is to take preventive measures.