Do you think Small and medium-sized businesses (SMBs) play a crucial role in the economy of a country? Yes, they do. There is no doubt about that But Why?
SMBs play a crucial role in the economy for the following reasons:
- SMBs are major job providers, offering a wide range of employment opportunities across various sectors.
- They are agile and adaptable, often driving innovation with their unique products and services. SMBs contribute significantly to a country’s GDP and play a vital role in local economic development.
- They have strong local ties, supporting communities and helping to circulate money within local economies.
- SMBs add resilience and diversity to supply chains, ensuring greater stability and flexibility.
I can go on… But you get the point.
If they are so important to the economy, are these businesses doing enough to protect themselves from cyberattacks?
Are governments encouraging them to prioritize cybersecurity?
There is some cybersecurity awareness within the SMB community, but do they have the budget to act upon it?
It’s a common misconception that only large enterprises, with their vast data reserves and extensive digital footprints, are the main targets for cyber attacks. In fact, a significant proportion of these attacks are focused on smaller businesses. Cyber criminals’ rationale behind this targeting strategy is clear: smaller enterprises often lag behind in deploying advanced security measures, making them susceptible to a wide array of cyber threats.
Here I would like to list Five Reasons Why SMBs Can’t Afford to Ignore Security
- Cybercriminals Prefer To Target Small Businesses. Period.
Let’s try to digest this fact with some numbers. Here are some startling statistics that underscore the vulnerability of small businesses in the cyber realm:
- 46% of all cyber breaches impact businesses with fewer than 1,000 employees [2021 Data Breach Investigations Report | Verizon]
- In 2021 alone, 61% of Small and Medium-sized Businesses (SMBs) found themselves at the receiving end of a cyberattack [2022 Data Breach Investigations Report | Verizon]
- A staggering 82% of ransomware attacks in 2021 were against companies with fewer than 1,000 employees. [Coverware Article]
- 37% of the companies that fell victim to ransomware had fewer than 100 employees. [Coverware Article]
- SMB Employees experience a whopping 350% more social engineering attacks compared to their counterparts at larger enterprises. [Barracude Spear-phishing Report]
- Customers do not want to trust SMBs that have been attacked
55% of people in the U.S. would be less likely to continue doing business with companies that have experienced a breach. [America’s small businesses aren’t ready for a cyberattack (CNBC)]
In the landscape of modern business, a company’s reputation is not just a peripheral concern; it’s one of its most valuable assets. This holds especially true for small businesses, where the relational dynamics play a much more intimate role in driving success.
For many customers, choosing to work with a small business is a deliberate decision. This choice often stems from the allure of personalized, “white glove” service that larger enterprises might struggle to consistently deliver. The scale of small businesses enables them to offer this unparalleled level of care, attention, and bespoke service. This kind of intimate business-consumer relationship fosters deep trust, with customers often feeling more like partners or even family rather than just another transaction.
However, this closeness and trust come with heightened expectations. Yes, customers recognize that small businesses may not have the infrastructure or sophisticated systems akin to those of more mature organizations. But this recognition is accompanied by an unspoken pact: “I understand and am willing to overlook certain limitations in return for the personal touch and care you offer. In this exchange, however, I trust you implicitly to keep my data and interactions safe.”
When a cyberattack or security breach occurs, this delicate balance is shattered. The damage is not just to the immediate business operations or the financial metrics. It is a piercing blow to the very core of the relationship. The trust, painstakingly built over time, is eroded in an instant. The aftermath of a security breach is littered with questions: “If they couldn’t protect my data, what else might they be overlooking? Can I trust them again? Should I risk another breach or just move to a larger, seemingly more secure enterprise?”
In an age where digital channels amplify word-of-mouth, news of a breach can spread like wildfire. Prospective clients might hesitate, thinking, “If they let this happen once, who’s to say it won’t happen again?” Thus, the ramifications extend beyond the immediate client base to potential future business as well.
- SMBs can’t afford the cost of a cyberattack
95% of cybersecurity incidents at SMBs cost between $826 and $653,587. [2021 Data Breach Investigations Report | Verizon]
This range underscores the variability in the scale of potential financial damage. For many small businesses, especially those at the higher end of that spectrum, such costs can be a death knell, pushing them towards insolvency or bankruptcy.
The potential financial consequences of a cyber breach for these entities can be both immediate and long-lasting, often dwarfing the initial financial estimates of the damage.
To put it into perspective, while a cyberattack might merely dent the earnings of a large enterprise, representing just a minor setback in their expansive financial portfolio, the story is starkly different for SMBs. These businesses operate on narrower margins and often lack the extensive financial cushions that larger corporations have at their disposal.
As such, a serious cyberattack doesn’t just strain an SMB’s financial resources—it can challenge its very existence.
Let’s break down the types of expenses a business may need to incur in the aftermath of a cyberattack:
Immediate Costs: This can include the cost of forensic investigations to determine the extent and source of the breach, legal fees to address potential liabilities, and the often-overlooked expenses associated with notifying affected customers.
Regulatory Fines: Depending on the jurisdiction and industry, regulatory bodies might levy heavy fines on businesses that fail to adequately protect customer or client data. For SMBs, these fines can represent a significant portion of their annual revenue, further straining their financial position.
Loss of Business: Trust is an invaluable currency for SMBs. A security breach can erode customer confidence, leading to a decline in sales, contracts being terminated, and difficulty in acquiring new clients. This drop in revenue can be prolonged, especially if the breach gains media attention.
Potential Lawsuits: Affected parties, whether they’re customers, clients, or partners, might pursue legal action against the business for failing to protect their data. The legal defense costs, combined with any potential settlements or judgments, can escalate quickly.
- SMBs can’t afford to halt operations
A smooth flow of operations often implies that things are working as they should, and any disruption to this flow can have repercussions far beyond immediate tangible losses. One of the most potent disruptors in today’s business environment is the threat of cyberattacks.
When systems go offline due to a cyberattack, basic operations can grind to a halt. Whether it’s processing transactions, accessing vital data, or simply communicating internally, businesses heavily rely on their digital systems. Interruptions, even if they last just a few hours, can cause backlogs, missed deadlines, and operational chaos.
The direct consequence of operational disruption is the potential for revenue loss. Especially for businesses that rely on real-time transactions, like e-commerce platforms or digital service providers, downtime can translate into a significant dip in sales. And as the old adage goes, “Time is money.”
System downtimes don’t just affect the machinery of business; they impact the human component as well. Employees unable to access necessary tools or information can’t perform their roles effectively. This idle time, when stretched, can cause a decline in overall productivity, and also lead to frustration and reduced morale.
- SMBs Are A Gateway to Bigger Fish
SMBs frequently serve as suppliers, service providers, or partners to larger corporations, establishing a network of interdependencies. Cybercriminals, with their eyes set on these larger, more fortified targets, have realized that breaching an SMB can provide them with a backdoor entrance.
Large enterprises, with their vast resources, often implement stringent security protocols, making direct attacks a formidable challenge. SMBs, however, may not have the same level of security infrastructure in place, creating a disparity that cybercriminals are eager to exploit.
SMBs usually have trusted connections with their larger partners. Once a small business’s system is compromised, cybercriminals can leverage this trust to infiltrate the larger enterprise.
From a cybercriminal’s vantage point, SMBs represent “low-hanging fruit”. Their security controls, often due to budget constraints or lack of awareness, might not be as robust or up-to-date as those in larger corporations. This makes them easier targets for quick, often lucrative payoffs, whether it’s through direct theft, ransom demands, or leveraging the acquired data in other malicious ventures.
In conclusion, the narrative that cyber threats predominantly loom over large corporations is both outdated and dangerous. The data underscores a pressing need for small businesses to recalibrate their approach to cybersecurity. It isn’t a luxury or an afterthought; it’s an imperative for survival in an increasingly digitalized and threat-laden landscape.