Downtime costs small businesses $3,000 a day

Downtime costs small businesses $3,000 a day

Aug 30, 2014

 

Extreme weather conditions can have a significant impact on small businesses in the US, according to recent research.

The American Sustainable Business Council (ASBC) and Small Business Majority (SBM) last month claimed the median cost of downtime for companies is US$3,000 a day.

One-quarter of small and medium-sized enterprises never re-open after a major incident occurs, with 57 per cent of businesses not having a disaster recovery plan in place.

In many cases, small businesses have more concentrated physical assets. This means a natural disaster has a more significant impact on these firms than larger organizations that are more geographically dispersed

Oracle users could benefit from implementing standby database protocols, whereby replacement databases are maintained offsite, providing failover options in unforeseen circumstances.

However, the ASBC and SBM report said many organizations simply do not analyze the economic effect associated with natural disasters and other climate-related weather events.

Of the companies that do have procedures in place, 90 per cent are guilty of spending less than a day each month maintaining them.

Gauging the impact of natural disasters

The ASBC-SBM research estimated around 30 per cent of the 60,000-100,000 small companies hit by Hurricane Sandy failed because of the storm.

Titled 'Climate Change Preparedness and the Small Business Sector', the report said these organizations often lack the resources and capacity to cope with extreme weather. As such, a single natural disaster can result in devastating economic losses.

Richard Eidlin, co-founder and director of public policy and business engagement at the ASBC, said small businesses employ approximately 60 million people in the US.

"The small business community can play a vital role in bolstering our nation's overall resilience to climate change," he explained.

"Furthermore, small businesses can simultaneously minimize losses from extreme weather by strategically investing to make their businesses more resilient."

Preparing for extreme weather conditions

The report highlighted the importance of being aware of vulnerabilities and making organizational changes to boost preparedness for when problems arise.

Mr Eidlin emphasized business continuity plans as a crucial component in strengthening a company's resilience.

Business owners were advised to be aware of both the direct and indirect risks of extreme weather. This means tornados, hurricanes and floods themselves, or the resulting power outages, system failures and supply chain disruptions.

Rhett Buttle, vice-president of external affairs for SBM, stated that awareness of these problems is on the rise within small businesses.

"More and more entrepreneurs are seeing real-life impacts to their businesses and their bottom lines from climate change and the extreme weather events it creates, and they want something done to help curb those effects," he said.

Could cloud DR be the answer?

According to the ASBC and SBM, small businesses are disproportionately affected by technology and telecommunications failings.

However, recent International Data Corporation (IDC) research sponsored by Acronis showed SMEs may be overcoming such issues by choosing disaster recovery in the cloud.

IDC data revealed 65 per cent of organizations are now backing up vital business information online. US companies are leading the way, with 92 per cent of those polled using cloud-based back-up for at least part of their operations.

"Data is more plentiful, complex, and valuable than ever before," said Serguei Beloussov, CEO at Acronis.

Cloud DR has numerous benefits compared with alternative recovery solutions, including lower upfront costs and maximum utilization of server resources.

Businesses that invest in standby databases, for example, can store unlimited replacements in the cloud, which can be launched in minutes.

There are also sophisticated security measures in place to ensure data is protected when being transferred and updated.

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