Cybersecurity isn’t a technological buzzword – it’s a necessity for modern businesses. The internet has created an incredible opportunity for businesses and consumers, but it has also created opportunities for unsavoury individuals to access and extort private information.
Startups tend to be even more at risk, as they often lack the resources to invest heavily in cyber security features. Founders are quick to find out that they must be willing to allocate resources to protect the information they collect as a data breach can cost them dearly. Here are the cost implications of a data breach for a startup company.
Trust
Failing to have strong cybersecurity and online data backup protocols in place will cost a startup the trust they’ve started to earn, not only from customers but also from investors. Whether someone spends their money on your product or gives you money to get your startup off the ground, they’re putting their trust in your business acumen.
A data breach damages your reputation with customers, investors, suppliers, and the global community as a whole. We’ve seen this effect with the Facebook data breach of 2018 and the employee-caused Canada Revenue Agency breach of 2017. In a world where so much information is shared and stored online, people expect you to have the right tools in place to keep their information safe.
Fines and legal fees
Depending on the situation surrounding the data breach, a startup could be faced with hefty fines and legal fees to get the problem sorted out. If it’s discovered that the business is not in compliance with laws pertaining to protecting personal information, they could face a substantial fine in addition to paying for a trial.
This is one of the many reasons that startups should prioritize compliance, and ensure that they have the right protection in place. Every time a new protective product hits the market, there will be someone with ill intentions trying to find a way around it. Protecting your information means protecting your business.
Productivity and resources
When something goes wrong in your startup, you need to assign people – your most valuable resource – to get it sorted out. That detracts from the productivity of daily operations and ultimately impacts your bottom line. Furthermore, the stress associated with a data breach is going to impact your employee morale, creating a vicious cycle.
While large-scale, established businesses often have the resources to handle such a crisis, startups usually do not. As a result, a data breach can destroy the business.
Monetary considerations
A loss of trust from investors and customers, fines, and resource reallocation all culminates in one significant loss: money. A data breach can cause a startup to haemorrhage funds, which are often limited in the first place. Hiring outside consultants to assist with correcting the process and losing customers and investors can be crippling.
It’s estimated that 60% of small businesses that experience a data breach or cyber attack are out of business within six months following. Don’t let yours be one of them.
How to prioritize cybersecurity
Knowledge is power when it comes to implementing strong cybersecurity practices. Both you and your employees should become well-versed in what behaviours contribute to weakened cybersecurity, and the implications of these behaviours Use this knowledge to create a strong cybersecurity policy and have all members of the organization read and sign it.
Consider hiring an outside agency to implement a strong firewall and to ensure that your practices and tools are in compliance with regulatory considerations. Additionally, schedule regular information backup sessions in case something goes wrong. By prioritizing cybersecurity, you prioritize the longevity of your startup.
