The Cost of Downtime Explained in 7 Ways
A recent survey found that 40% of small and midsize businesses (SMBs) experiences 8 or more hours of downtime due to a severe security breach within the past year. According to the National Cyber Security Alliance, 60% of SMBs who experience a significant data breach go out of business within six months. The highest cost of an unplanned outage is more than $17,000 per minute. The average cost per minute of an unplanned outage is nearly $9,000 per incident. These statistics are sobering. For many SMBs, however, the risks still feel foreign and not something that warrants action. To protect your business requires some knowledge and good advice, intent, action, small investments.
It is easier to rely on myths such as, “We are not a target for cyber attackers”, “We can run on pen and paper until we recover”, and “Our customers will understand” than it is to assess your risks and take action. Nevertheless, the risks are real and the number of SMBs hurt by downtime continues to rise.
The cost of downtime can vary depending on the size of the organization, the industry, and the nature of the downtime. Downtime can be caused by various factors such as power outages, network failures, software issues, or hardware failures. In today’s world, it’s essential to streamline security if you’re a SMB, and understand the consequences downtime can have on your business.
Here are seven ways downtime can damage your business:
1. Monetary Cost
Downtime leads to lost sales and lost productivity impacting top-line revenue and your bottom line. These costs hit your pocket in addition to the cost of recovery and returning to normal operations. If you need to calculate the average cost of downtime, our specialists can help.
2. Customer Trust
When you are unable to serve your customers, they lose faith in your business. While downtime for natural disasters is understandable, today’s customers have little tolerance for disruptions due to cyber attacks and breaches. Lost trust means lost customers.
3. Brand Damage
Your brand identity and reputation drives customer loyalty and growth. Service disruptions from technology failures or breaches sends a message that your business may be poorly managed and is unreliable. These messages lead to loss of goodwill and create negative impressions of your business in the minds of your customers.
4. Employee Morale
Disasters due to data loss or breaches means employees need to perform double duties. Employees spend time on recovery while working to keep the business operational. It often requires additional work hours. Recovery can be stressful and demoralizing.
5. Business Value
Businesses that suffer data breaches and service disruptions are perceived as poorly managed. With the potential financial liability, public companies can see stock prices fall. All companies can suffer a loss of business value.
6. Legal Action
Downtime creates the risk of legal action. This is particularly true for downtime that is perceived as preventable. System failures, data loss, security breaches, and other incidents can put your business in breach of contract. You may also be in violation of state and federal regulations, making proper data protection and security vital.
7. Compliance Fines & Penalties
As information privacy and security regulations expand, data loss and breaches create the real potential for fines and penalties related to regulatory compliance, privacy, and data retention requirements.
These risks carry the potential for lasting damage. Whether by increased financial burdens or winning back customers, the impact of downtime extends well beyond getting yourself up and running again.
Is your business worth protecting?
Protecting your business will not break the bank. We offer practical, affordable cloud infrastructure solutions that help you and your team understand the risks, prevent problems from happening, and continue operating in the event something bad does happen.
If your business is worth protecting, contact us for a complimentary Cloud Advisor session to discuss how we can improve your business’ resiliency.
