Small Business: Cyber Security Impacts Your Valuation

Every small-business owner looking for capital or investors needs to understand that cyber security and employee readiness have a meaningful impact on both your company’s valuation and the likelihood that you will find financial partners. Small business cyber security can be as crucial as your financials, because it affects your financials.

Investors Want Robust Cyber Security

If you have plans to grow your business or take it public, you need to consider the cyber risks you face and the security measures in place to mitigate them. Cyber security factors in to your small-business valuation, as does the types of risks your business faces and the likelihood that a cyber attack could be an existential threat.

There are four generally accepted types of risk that impact a business valuation, all of which must be evaluated in terms of small business cyber security risk:

1. Strategic Risk: Will a competitor beat your business in the marketplace? If they have strong small-business cyber security and you do not, your valuation will be lower.
2. Compliance and Regulatory Risk: Will you be forced to shut down due to legislative changes or failure to meet current regulations? Data protection and user notification in the event of a breach are increasingly in focus among U.S. and international regulators.
3. Financial Risk: Can you pay back your loans if your user data are stolen, or if you need to pay a ransom to unlock your systems? Would a temporary shutdown caused by poor cyber security leave you vulnerable to bankruptcy?
4. Operational Risk: Could hackers take your website or back-end systems offline or permanently destroy data you need to operate?

Small business cyber security needs to address all of these risks, as well as reputational risk, or fallout from a breach that damages your businesses’ standing in the eyes of potential customers or investors.

Banks Demand Small Business Cyber Security

If you apply for a loan or credit facility, expect the bank to want to see your cyber liability policy, your means of compliance and your overall cyber security strategy. It does not matter what industry your business is in.

Farmers, lawyers, manufacturers, service providers, retailers and tech companies all need to show that they have cyber security training, monitoring and mitigation in place. Banks and lenders won’t talk to you if you don’t have robust cyber security, because they can always lend to businesses that do.

In the early stages of running a small business, cyber security may not be top of mind, but as your business and visibility grow, the chances that you will become a victim of a cyber attack rise exponentially. Investors and lenders know this, which is why they want to see a cyber security plan that meets current needs and can scale with the business.

Get Experienced Help from a VCISO

A Virtual Chief Information Security Officer, or VCISO, is an experienced cyber-security executive who consults with small businesses on threat monitoring, system protection and employee training. A VCISO will conduct a thorough cyber security audit, recommend and implement cyber security upgrades and coordinate employee training to mitigate cyber risks.

Small businesses that work with a reputable VCISO will see the benefits of that partnership in stronger business valuations and greater access to lenders. They will also sleep better at night, knowing that they have taken a critical step in protecting the business they built from cyber attacks.

Protect Now provides complete cyber security solutions for small businesses and managed service providers. When you’re ready to grow your business and get serious about cyber security, we are here to help with fully customized solutions that can adapt to legacy systems.

Our small-business cyber security solutions were built to serve the needs of businesses that interact extensively with the public via email and text, and that handle sensitive communications, financial documents and personally identifying information. Contact us online to speak to a cyber security expert or call us at 1-800-658-8311.

Written by Robert Siciliano, CEO of Credit Parent, Head of Training & Security Awareness Expert at Protect Now, #1 Best Selling Amazon author, Media Personality & Architect of CSI Protection Certification.