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Time is money. That old saying rings true today as never before. We’re talking about downtime – that dreaded event in which our IT systems “go down,” bringing all our computer-based activities to a halt. The causes are many: power outages, hacking attacks, weather, disasters of various kinds, glitches and internal errors. Downtime causes major headlines (and headaches) when it affects big brands like Amazon or Jet Blue, racking up millions of dollars in lost productivity and revenue, and generating negative headlines. But downtime actually does the most harm when it strikes small businesses. And unlike enterprise-level corporations, they often lack the resources to absorb the damage. In fact, 64 percent of IT pros in one recent study called downtime “a life-or-death event” for SMBs.

IT Downtime Happens to Every Business
Downtime events happen to every business. An IDC-sponsored survey recently found that 80 percent of SMBs had experienced one, with costs ranging from $82,200 to $256,000 depending on the duration (the national annual average is 200 minutes, according to the National Process Institute) and on the type of business. Every second counts when your system goes down, with the average per-minute cost estimated by the IDC survey respondents at between $137 and $427 for smaller players.

Why Is Downtime So Costly?
A number of factors contribute to the cost of downtime. These include hard costs:

  • Loss of Revenue. This is not limited to the event but includes loss of future business as dissatisfied customers opt to go with an available competitor.
  • Loss of Productivity. Without a functioning IT system, you can’t sell or deliver your products, or communicate with your customer or vendor base. And remember, your business may be at a standstill, but you still have to make payroll for your employees who are idled – and that will probably include overtime for your IT team.

Latent costs add to the bill as well:

  • Loss of Reputation. Customers frustrated by your lack of availability will likely spread negative messages – which travel with lightning speed on social media. Word-of-mouth can be equally damaging.
  • Penalties. Depending on the type of business you operate, you could face lawsuits or penalties if you fail to deliver services on time or provide ready availability to clients under contract.

How Much Can You Afford to Lose?
Arizona-based North American Systems International provides the following formula to calculate revenue costs of an outage. Plug in your own numbers, and consider the possibilities.


  • GR = gross yearly revenue
  • TH = total yearly business hours
  • I = percentage impact
  • H = number of hours of outage

Note, this formula does not take into account additional potential costs that could impact your bottom line: lost productivity, overtime, penalties and fees for missed deadlines or breached contracts; or dollars needed for damage control with employees, vendors and clients.

Defending Against Downtime
Defend against downtime with ongoing monitoring of your system to identify potential disruptions, and implement a robust business continuity plan to minimize lost time. Affordable cloud-based storage solutions assure uninterrupted access to your vital data as your system is restored. Qualified IT teams can help with the solutions you need, but many SMBs choose to go with an experienced managed services provider. This external resource can focus on defense, while your internal team plays offense, helping you advance your business day to day.