Survey highlights the heavy cost of business downtime for SMBs

Downtime is a major challenge for small and medium businesses (SMBs) today. The IT systems of nearly a quarter of SMBs have gone offline in the past year, according to new research from cloud-based data protection company Infrascale, SMBs said the downtime creates business disruption and decreases employee productivity. More than a third (37%) of SMBs in the survey group said they have lost customers and 17% have lost revenue due to downtime.

“Customer retention is essential for business success,” said Russell P. Reeder, CEO of Infrascale. “It can cost up to five times more to attract a new customer than to retain an existing one, and when customers leave, businesses lose out on vital profit and operational efficiencies. Especially in today's competitive environment, it's challenging enough to retain customers. With all the cost-effective solutions available, downtime shouldn't be a reason for concern."

Nearly a fifth (19%) of SMBs admit that they do not feel their businesses are adequately prepared to address and prevent unexpected downtime. Of those SMBs that said they feel unprepared for unexpected downtime, 13% said they do not feel their business is prepared for unexpected downtime because they have limited time to research solutions in order to prevent it.

More than a quarter (28%) attributed not feeling prepared for unexpected downtime due to IT teams at their organization being stretched. The same share (28%) said they don’t think their business is at risk from unexpected downtime. Yet more than a third of SMBs (38%) said they don’t know what the cost of one hour of downtime is for their businesses.

The Infrascale research is based on a survey of more than 500 C-level executives at SMBs. CEOs represented 87% of the group. Most of the remainder was split between CIOs and CTOs.

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Keeping customers

“Customers today are extremely demanding,” said Reeder. “They are intolerant of delays and downtime. The Infrascale research highlights this business reality.”

Thirty-seven percent of the SMB survey group admitted to having lost customers due to downtime issues. This problem was especially pronounced among business-to-business entities; close to half (46%) of B2B businesses have experienced such a loss. As for business-to-consumer SMBs, a quarter (25%) said they have lost customers due to downtime problems.

Business disruption

Loss of customers and revenue are just two of the downsides of IT system-related downtime. Downtime also can hurt employee productivity and adversely impact a company’s reputation.

SMBs said the biggest downtime risks are business disruption (29%) and decreased employee productivity (21%). As noted above, nearly a fifth have lost revenue (17%). Reputation impact (16%) and cost (13%) came in next.

Software failure (53%) and cybersecurity issues (52%) are the most common causes of the downtime that creates these business challenges, according to the Infrascale survey group. A significant, but far smaller share of the SMB survey group blamed downtime on hardware failure (38%), human error (36%), natural disaster (30%), and/or hardware theft (24%).

Downtime costs

A tenth of SMBs (10%) said their per-hour downtime cost was more than $50,000. Thirteen percent said their per-hour downtime cost was between $40,001 and $50,000. A quarter (25%) of SMBs said the per-hour cost of downtime for their business was between $20,001 and $40,000. A slightly larger share (26%) said they incur a loss of $10,000 to $20,000 for each hour of downtime, while 27% said their cost of downtime per hour was under $10,000.

The good news is that the survey group indicated downtime typically lasts for minutes instead of hours. More than a fifth (22%) of the survey group said their downtime events typically last anywhere from five to 15 minutes. Just less than a fifth (17%) of the group said their downtime commonly stretches on for 15 to 30 minutes, and another 17% said an hour. Just 6% said over an hour.

“The downtime duration results may seem reassuring, but in today’s challenging and fast-moving business environment, every second counts,” said Reeder. “Even if your company was down for minutes, just think of the reputational damage it can cause as well as real costs when data cannot be recovered. There is really no excuse these days for not backing up your data.”

Being prepared

Nearly a fifth (19%) of the B2B survey group said they do not feel their business is prepared for unexpected downtime, and B2C organizations feel even less prepared. More than a quarter (27%) of B2C survey participants said they believe their business is unprepared for unexpected downtime.

“These survey results illustrate that there’s plenty of room for improvement when it comes to business uptime,” Reeder added. “Organizations can benefit from application and server backup, ransomware mitigation, disaster recovery as a service (DRaaS), encryption, and state-of-the-art endpoint protection. Investments in such solutions enable them to avoid downtime and enjoy business continuity, which are essential for a growing and thriving business.”

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