The Real Cost of IT Downtime for Small Businesses

The Real Cost of IT Downtime for Small Businesses

Let’s cut right to the chase. Just one minute of downtime can cost a small business between $137 and $427.

Almost every modern business relies on IT. Beyond desktops and workstations, you probably need mobile devices, servers, cloud-based apps and internet-based phones to get work done. If any one of these resources goes down, customers may leave and never return. Think about it, would you do business with a company that was unreliable or inaccessible?

In an age of online reviews and social media, you can’t afford to let this happen.

What’s at stake?

Downtime scenarios vary widely. Many companies expect and plan for a degree of downtime, particularly during routine maintenance or hardware and software upgrades. Of course, these scheduled downtimes need to be kept to a minimum; but with proper planning, you have the chance to warn your customers in advance.

What’s worse is unexpected downtime, which will quickly eat away at your reputation and encourage even loyal customers to start looking elsewhere.

It’s not just customer dissatisfaction you have to worry about, however. Here are some of the other factors that can end up affecting your bottom line:

  • Reduced employee productivity and motivation
  • Lost sales revenue
  • Supply chain disruption
  • Employee overtime costs
  • Systems and data recovery costs

Worse still is the fact that the cost of downtime is increasing every year as businesses become more reliant on an ever-growing set of modern technologies. Most of the time, human error is the weakest link, particularly in the case of on-premises IT systems that tend to be costly to maintain.

Identifying the cause of downtime costs

New technology has shifted expectations. Customers demand that businesses stay open later and close for holidays less often.

Even a traditional high-street business is expected to have a consistent online presence with a fast and reliable internet presence at its core. As such, regardless of the nature of your business, every minute of unscheduled downtime can increase overhead costs and ultimately lead to the aforementioned issues.

The problem with unscheduled downtime is that it’s often difficult to resolve.

From pinpointing the cause to taking steps to mitigate the damage, there are many things you need to do to curb costs. Other factors include the cost of lost employee productivity, the procurement and implementation of new equipment and the cost of any third-party contractors you may need.

Calculating the costs of downtime

Lost sales revenue is perhaps the biggest expense, especially in the case of businesses that operate primarily or entirely online. After all, if your systems are down, there’s a good chance that you won’t be able to generate any revenue at all.

To calculate the cost of lost revenue, you’ll first need to identify which systems are responsible for generating revenue, such as your website, internet-based phones and customer relationship management software. You’ll then need to calculate the average amount of revenue you receive per hour to determine how much any lost sales are costing you.

Reduced employee productivity is another major cost of unexpected downtime.

If you’re paying your employees to come to work and there’s nothing they can do, they’ll quickly lose their motivation as well. You can calculate the cost of lost productivity by the amount each employee earns against the percentage of their work that is reliant on the afflicted systems.

Finally, there’s the cost of recovery to think about, such as the services you need to recover any lost data or any devices that need hasty replacement.

Downtime can also lead to ongoing costs while new systems are in the process of being deployed, particularly if any staff retraining is needed. The final cost per hour of downtime will, of course, vary enormously from one business to the next, but you need to define an acceptable maximum and prepare for it as exhaustively as possible.

Spectrumwise provides a range of managed services and other IT solutions to alleviate many of the concerns that small businesses have regarding downtime. If you’d like to find out how our dependable services can give you peace of mind, give us a call today.