The Short and Long-term Consequences of Data Breaches for Small Businesses

You will find news stories about hacked websites and data breaches all over social media any day of the week. It is even difficult to avoid these kinds of stories, even if you don’t think they are relevant. But the reason this is such an interest to the media and the general public is that it can happen to anyone. People need to realize that data breaches threaten everyone—business owners and consumers alike.

Criminals target small businesses because their websites and systems have meager protection. Some don’t even do data backup regularly. Once cybercriminals are into your systems, they take less than a minute to steal everything your business has—passwords, financial information, consumer data, and a lot more. It will take you more time to make a cup of coffee than for cybercriminals to steal every available data from your system.

The most disconcerting part of this is that businesses usually take weeks to figure out their systems have been compromised. This false sense of security makes small businesses easy targets. After all, the laxer you are with what little data you hold, the easier it is for cybercriminals to target your business.

Short-term Consequences

The short-term consequences of data breaches are all about the money. Businesses have to pay fees and penalties to the Payment Card Industry Security Standards Council. Other regulatory bodies and card network brands may also impose fees. Aside from that, you may have to face a lawsuit from some customers who feel that their security was threatened because their data fell into the hands of cybercriminals.

Another thing that businesses victimized by data breaches have to face is forensic investigations. To get to the bottom of the problem, authorities will have to dig deep into the systems you put in place before. These investigations will be useful in determining how to protect your business in the future better. You will have to shoulder the costs of the investigation, however.

Finally, credit card companies will require customers who experienced a data breach to undergo mandatory credit monitoring. Since you were at fault, you will have to shoulder these fees for your customers. You also need to pay for card replacement, identity theft repair, and other compliance requirements.

Long-term Consequences

The biggest impact of a data breach is the loss of customer trust and confidence. When customers feel that they can no longer trust you, then where will that lead them? They’ll look for another company that can deliver the same promises as you. And yes, there are a lot of companies that are willing to pounce on your clientele. Do not give them that opportunity.

Your good reputation is your best asset. Customers transact with your business because they know they are getting a good deal—great products and secure payment methods. Over the years, customers realized the importance of keeping their financial and personal information secured. Surveys said that Baby Boomers and Generation Z are very particular about the security of the information they share with brands.

In a 2019 Verizon study, participants said that they prioritize data security and privacy when deciding whether to subscribe or not to a service. About 69% of the participants said they would avoid a company that had data protection problems before. Of that number, 29% said they would never consider supporting that company.

The first step to safeguard your business’ data is to understand how a data breach can affect your whole business operation. After this, you can create a realistic and measurable plan to protect your data and customer information better. These preventive measures will allow your business to grow and thrive even amid such extraordinary times as a pandemic.