Running a business means constantly collecting customer data, such as identity and behavioral information, and using it to personalize user experiences and complete orders. Without it, a company would struggle to function and fulfill contracts. That’s why data breaches that corrupt or steal this information are among the biggest threats to business owners.

What Are Data Breaches?

Data breaches are security incidents where data leaks release information to unauthorized third parties. From simple employee errors due to neglect to cyber attacks like phishing and malware, sensitive and confidential information about a company and its customers gets out. But what does that mean for your business?

Are Breaches More Dangerous for Small Companies?

Many believe cybercrimes target larger companies since they have more funds and data that hackers can exploit or hold for ransom. However, the Verizon State of Small Business Survey from January 2024 claims that 51% of small businesses don’t have data security, whether in training, tools, or cyberattack experience. So, they’re easier targets than larger, more protected ones.

How Data Breaches Affect Small Companies

Losing Funds to Fix the Issue

According to Fox Business, it costs between $10,000 to $100,000 for forensics experts to uncover and identify the breach alone. Not only are more established businesses better equipped to handle these costs, but smaller businesses are also less prepared to handle what comes next, which is breach response.

With fewer departments, smaller companies may have to outsource consultants, attorneys, and crisis management (among others) to deal with and abolish the threat properly. With all these fees, it can be hard for a small company to stay afloat. Cybercrime Magazine claims 60% of these businesses shut down during the six months following an attack, proving they can jeopardize your company’s longevity.

Increasing Customer Turnover and Loss of Revenue

With data breaches involving each customer’s personal information leaking, such as their age, name, and even bank account and credit card numbers, it’s understandable they’ll be upset to learn about the incident. Therefore, after notifying them about the threat, it’s imperative to set up a call center where they can voice their concerns and complaints and learn more about the next steps.

Business owners can also provide free credit monitoring and other services as damage control, but it’s still likely that many long-time and loyal customers will leave for one of the business’ competitors. This increases customer turnover and loss of revenue, proving the indirect effects and costs of breaches.

Diminishing Your Reputation with Customers and Employees Alike

A customer’s personally identifiable information (PII) isn’t the only data that leaks during these attacks since employees may also feel threatened. That means losing employees and job applicants is just as common as losing customers due to a diminished reputation.

A credit rating downgrade may also follow, leading to:

  • Negative media coverage
  • Higher interest rates from investors
  • A lower ability to secure financing
  • Since nothing good comes from data breaches, take precautions for your small business by implementing the appropriate cybersecurity measures today!

The Real Cost of Data Breaches

Financial Impact

The immediate costs of a data breach can be staggering. Forensics, legal fees, crisis management, and regulatory fines quickly add up. Small businesses often lack the financial cushion to absorb these expenses. Beyond the initial costs, there are ongoing financial impacts, such as increased insurance premiums and the costs of implementing new security measures to prevent future breaches.

Operational Disruption

When a data breach occurs, the operational impact can be significant. Business processes may grind to a halt while the breach is investigated and resolved. This downtime can result in lost sales, delayed projects, and a disruption in customer service, all of which can have long-term repercussions on the business's success and customer satisfaction.

Proactive Measures for Businesses

Employee Training and Awareness

One of the most effective ways to prevent data breaches is through comprehensive employee training and awareness programs. Employees should be trained to recognize phishing attempts, understand the importance of strong passwords, and follow best practices for data security. Regular training sessions can help keep security top of mind and reduce the risk of human error.

Implementing Strong Security Measures

Businesses must implement robust security measures to protect their data. This includes using encryption for sensitive data, installing firewalls and antivirus software, and regularly updating all systems and software to protect against vulnerabilities. Multi-factor authentication (MFA) should also be used to add an extra layer of security to critical systems.

Regular Security Audits

Regular security audits are crucial for identifying potential vulnerabilities before they can be exploited. Businesses should conduct thorough audits of their systems, networks, and data storage practices to ensure they are following best practices and are prepared to respond quickly to any threats.

Responding to a Data Breach

Immediate Actions

In the event of a data breach, immediate action is crucial. Businesses should have a response plan in place that outlines the steps to take, including identifying the source of the breach, containing the breach to prevent further damage, and notifying affected parties as quickly as possible.

Communication is Key

Effective communication is essential during a data breach. Businesses must inform their customers, employees, and stakeholders about the breach and what steps are being taken to address it. Transparency helps maintain trust and shows that the business is taking the situation seriously and working to resolve it.

Long-Term Recovery

The recovery process after a data breach can be lengthy. Businesses will need to repair any damage done, implement new security measures to prevent future breaches, and work to rebuild their reputation with customers and employees. This may involve ongoing monitoring and support for affected parties, as well as continued investment in security infrastructure.

Let's Recap

Data breaches are a significant threat to businesses of all sizes, but small businesses are particularly vulnerable due to limited resources and often inadequate security measures. By understanding the risks and taking proactive steps to protect their data, businesses can reduce the likelihood of a breach and be better prepared to respond if one occurs. Investing in employee training, implementing strong security measures, and conducting regular audits are essential components of a robust cybersecurity strategy. In the event of a breach, swift and transparent communication, coupled with a well-executed response plan, can help mitigate the damage and set the business on the path to recovery.

At CTTS, we are committed to helping businesses in Austin, Round Rock, Georgetown, Taylor, Jarrell, and Cedar Park, Texas, strengthen their cybersecurity posture and protect their valuable data. Contact us today to learn how we can support your business in preventing and responding to data breaches.