3 Dire Consequences of a Data Breach for Small Businesses
Hackers launch over 2,200 cyberattacks every day. A good number of these attacks target businesses.
As a small business owner, you might be looking at this and wondering why it should concern you. After all, isn’t it true that hackers are always targeting big corporations with fat bank accounts?
Well, you’re wrong. Hackers hit small businesses just about as much as they hit big companies.
This is enough to make you spring into action. If you don’t, you’ll be courting disaster. In this article, we’re fleshing out the consequences of a data breach for a small business like yours.
Let’s dive in.
Table of Contents
1. Big Financial Losses
According to IBM’s 2022 Data Breach Report, the average financial cost of a data breach is $4.35 million.
A data breach can have both direct and indirect effects on the finances of your business.
If you’re an eCommerce business and hackers bring down your website, for example, you’ll suffer lost sales. If you sell $50,000 a day on average, multiply that by the number of days the website will be down, and you can see how the losses pile up fast.
If you manage to restore the website to full functionality, it might not be business as usual. Some of your customers will be hesitant to shop on the site, fearing for the safety of their personal data. Other customers would have since switched to your competitors.
Also, perhaps you will need to hire cybersecurity services to help you restore your IT systems. These services will come at an extra cost.
If personal customer data was stolen, it won’t be long before your business is facing a data breach class action. These lawsuits can be expensive. In fact, some businesses have folded after settling a data breach lawsuit.
Now you can see how easily a data breach can cost your business millions of dollars.
2. Reputational Damage
It takes 20 years to build a reputation and 5 minutes to ruin it. These wise words by Warren Buffett don’t just apply to individuals. Even businesses take so long to become reputable, but a small mistake can undo the hard work in minutes.
A data breach can hurt the reputation of your business. The level of reputational damage will depend on the nature and severity of the breach.
For example, if a data security breach occurred because your company didn’t deploy adequate cybersecurity measures, your brand reputation could take a major hit. Customers will promptly conclude that you were negligent and reckless, so the company deserves no second chance.
Reputation damage comes with the loss of customers and even employee trust. Acquiring new customers and workers might become a tall challenge.
3. Loss of Intellectual Property/Confidential Business Secrets
Businesses don’t just store customer and employee data. They also keep top trade secrets, such as business plans and product designs.
You obviously don’t want your business secrets to end up in the hands of your competitors, but that can happen in the event of a breach. Hackers can steal your secrets and publish them online or even sell them to interested parties.
Such leaks can jeopardize your business operations and diminish your competitive advantage.
Avoid the Deadly Consequences of a Data Breach
The internet has revolutionized the world of business, but it has also brought about several online threats, such as data breaches.
Your business collects and stores lots of data. Unfortunately, this increases the risk of an attack. If it happens, you’ll be left dealing with the consequences of a data breach, which can be fatal.
Stay on our blog to learn more about business, technology, and other topics.
Last Updated on May 3, 2023
