Australia is home to over two-and-a-half million small and medium businesses (SMBs). From construction and healthcare to finance and professional services, they’re the lifeblood of local communities.
They generate employment, power economic growth, stimulate innovation and enable millions of Aussies to enjoy more autonomy, control and earning potential in their careers.
Yet, business ownership is hard. Challenges and threats are in abundance – especially today. Perhaps the most critical is cyber security and data privacy. During the first six months of 2024, reported data breaches hit a three-and-a-half-year high. According to the Australian Signals Directorate (ASD), the government body tasked with managing cyber threats, the average cost of a cyber attack for SMBs rose eight per cent to AUD$49,600 in the last financial year.
Concerningly, many SMBs still believe they’re too small to be ‘at-risk’. Any business is at-risk, so it’s essential that SMBs understand that, and turn inertia into action.
Why data privacy matters more than ever for SMBs
As SMBs have rapidly migrated online in the last decade or so, it’s become an imperative to focus on cyber security and data privacy. However, this is becoming even more critical, with millions of SMBs set to be impacted by extended legislation. Until recent reforms were announced, Australian SMBs didn’t have to comply with the Privacy Act 1988, the law which governs how businesses handle and protect personal information.
However, the government recently announced that it will lift the exemption for businesses with annual turnovers under $3 million. Soon, 92% of SMBs must be compliant with the regulations – exposing them to potential fines and legal penalties if they don’t. That means SMBs must be thorough and transparent in the way they collect, store and process personal data. For the businesses that do so successfully, compliance is one benefit, but the bigger benefit might actually be building long-term customer trust.
Understandably, consumers are cautious and sceptical about how their data is collected and used. Businesses who are proactive about what they collect, why they collect it, and how it’s safeguarded can allay customer fears, encourage them to opt-in, and then enjoy the mutual benefits. However, Zoho research reveals that one in five SMBs are unaware of their obligation to inform customers about how their data is collected and used, which can lead to legal and reputational damage. That equates to around half a million businesses.
Preventing common data security mistakes
With cyber threats becoming more sophisticated, prevalent and damaging, SMBs must take action. Prioritising data security today helps SMBs avoid costly mistakes and create lasting customer loyalty. Indiscriminate attacks target vulnerabilities. That means, SMBs must minimise their vulnerabilities.
Many businesses still use outdated systems or unsecure data storage methods like spreadsheets or unsecured servers, which leaves them vulnerable to cyberattacks and breaches. What’s more, relying on multiple apps or vendors to store customer data only complicates security. The more systems a business uses, the harder it becomes to safeguard sensitive information.
To reduce these risks, SMBs should regularly update their software and security systems, and embrace a unified technology stack. Rather than using disparate systems for every process and department, a unified stack enables businesses to rely on just one (or a small number of) vendors for all of their software, which improves data protection, breaks down business silos and improves operational efficiency and insights. A unified technology stack, like Zoho, which has privacy as a foundation rather than an afterthought, helps businesses better protect customer data by minimising vulnerabilities.
In addition to system updates, businesses must address the human factors contributing to data breaches. Often, unnecessary access is granted to sensitive data, increasing the risk of exposure. Implementing role-based access controls ensures only authorised personnel have access to critical data. Employee training on cybersecurity threats, such as phishing and social engineering scams, is also essential. The more employees that can recognise and respond to potential threats quickly, the better.
Businesses need to implement ongoing security measures, rather than set-and-forget measures. Regular audits help identify vulnerabilities before they lead to serious issues. Multi-factor authentication, encrypted backups, and access logs protect against unauthorised access and data breaches. These steps not only boost security but also demonstrate to customers that their privacy matters.
A privacy policy is a necessity, too. Again, it’s about more than simply compliance; it’s a crucial tool for building customer trust. It outlines how a business collects, uses, stores, and protects customer data. It should clearly explain what data is being collected, how it’s stored, who has access to it, and how customers can opt in or out.
Despite its importance, Zoho research reveals that fewer than half of SMBs have a clear and applied privacy policy. Not only does the existence of an enforced policy help with compliance, it promotes best practice. SMBs should treat it as a critical document, not an optional one. Regularly reviewing and updating a privacy policy is key to staying compliant with changing laws and avoiding costly fines.
Today, strong data protection is essential. SMBs that prioritise privacy can protect against risk and build long-term loyalty and a positive brand image. While data privacy may seem daunting, a proactive approach – updating systems, using role-based access controls, and maintaining clear privacy policies – helps protect customer data and earn trust.
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