Top 3 Tech Threats for Small Business in 2023

As a challenging fiscal year comes to an end – and with an uncertain short-term economic future – it is imperative for small and medium-sized businesses to maximize their investment in technology. Major threats, including a looming recession, cyberattacks, and a tight labor market, apply significant pressure on large businesses. For small and mid-sized organizations, leveraging tech could be the difference between survival and extinction. This article identifies solutions by which small businesses can respond to each threat proactively and not only survive, but also prosper.

Small Business Threat #1: A Looming Recession

According to NDR, a leading independent research firm with more than 1,100 institutional clients in over three dozen countries, there is a 98.1% chance of a global recession.  “The only other times that our recession model was this high has been during severe economic downturns, most recently in 2020 and during the global financial crisis of 2008 and 2009.” (1)  In addition, seven out of ten economists surveyed by the World Economic Forum replied that a global recession was “somewhat likely.” (2)  Still, in just the past week, several important economic leaders have tempered the gloomy forecast, but only slightly.  Bank of America chief U.S. economist Michael Gapen says that three more minor interest rate increases will help, if not avoid, a recession.  “We expect a mild recession in 1Q to 3Q ’23.  With the Fed hiking to 5% to 5.25% in our forecast, history suggests a soft landing is unlikely.” (3)

Small Business Solution #1: Create a Technology Road Map

Many small businesses approach their technology budget similarly to less complicated operational areas, such as facilities management.  They review what they spent the previous year, apply a modest percentage increase, and call it a day.  While this likely never represents the ideal approach, during economic uncertainty, it can prove disastrous.  IT challenges behave like car trouble.  In the absence of proactive planning, a preventable issue becomes an expensive and time-consuming emergency.

Optimized organizations create an annual Technology Road Map, which includes areas dedicated to strategic projects, hardware replacement, security/cyber insurance, Help Desk/user support, and a current network diagram.    The Road Map aligns the entire organization’s strategic goals with its tech investment, ensuring that businesses don’t spend on tech for tech’s sake, but rather, to advance strategic initiatives.  This plan also considers what security projects must be completed either to apply for new cyber insurance or to renew coverage.  With requirements changing quickly, consulting with a security expert makes good sense (more on that just below).  Finally, a Road Map allows leadership to assign priority to desired projects, along with their costs in both time and capital expenditure.  Should a recession negatively impact the business, leaders can quickly identify which projects to eliminate (i.e., desktop upgrades) and which remain critical (i.e. MFA for email).  As the cliché goes, “By failing to prepare, you are preparing to fail.”

Small Business Threat #2: Cyberattacks

The digital landscape has never been more dangerous than it is today.  More than 3 billion phishing emails are sent each day. (4) That means that 1% of all Internet traffic aims to trick you or an employee into clicking on the wrong link and inadvertently provide a cyber terrorist with the keys to your internal network.  According to Cybersecurity Ventures, a company will fall victim to a ransomware attack every 11 seconds in 2023 with annual global ransomware damages estimated at $20 billion. (5) Most small businesses are simply not prepared.  According to Forbes, only 50% of small to mid-sized businesses have a cybersecurity plan in place and 32% haven’t improved their security posture since the pandemic forced most businesses into a hybrid working environment.  (6)  With the average ransom payment now more than $800,000, cyberattacks literally represent a life-or-death challenge to small businesses. (7)

Small Business Solution #2: Partner with a Third-Party Security Expert

Most small businesses partner with a CPA or accounting firm to file their taxes.  They consult with an attorney or law firm for legal issues.  They do so because the details and expertise required to maximize the company’s financial investment are beyond traditional, internal leadership.  The same goes for meeting today’s challenge of cybersecurity.  Small businesses must partner with a professional security expert, certified by a recognized industry authority, and focused on monitoring the latest developments in both threats and solutions.  Third-party security firms offer a range of services, including internal and external penetration tests, tabletop exercises to simulate attacks, and ongoing support, particularly when a business is governed by compliance regulations, such as HIPAA, PCI, or FDIC/NCUA.

When identifying a third-party security vendor, partner with an established company with a proven track record.  Make certain that security consultants offer recognized continuing education, such as the Certified Information System Security (CISSP), which requires their knowledge stay current.  At the same time, many partners offer a suite of security tools at bundled rates, which offers an opportunity to save money against purchasing those same products a la carte at the retail price.

Small Business Threat #3: Tight Labor Market

The current tight labor market is already well documented.  However, historically, whatever happens in the general labor market happens more intensely in the technology space.  For example, while the current U.S. unemployment rate is 3.7%, unemployment in the tech industry is just 2.1%, or 57% tighter.  According to the CompTIA Tech Jobs Report, in 2022, 175,000 new tech jobs have been created, tracking 46% ahead of 2021. (8)  While all recruiting remains challenging, recruiting for tech positions is even more so.  According to the Society for Human Resources Management (SHRM), the average cost to hire an employee is nearly $4,700 and takes 42 days. (9) For tech positions, the average salary ranges from 20% to 85% more than the average salary and takes up to 120 days.  When using a recruiter, employers will pay referral fees between 15% and 30% of those higher tech salaries. (10) In other words, when hiring for a tech position, employers take longer to find a viable candidate, spend more on the recruitment itself, and pay the new employee a significantly higher salary.

Small Business Solution #3: Outsource Your IT team

When you outsource your IT team, you immediately eliminate the cost to recruit, hire, and retain your highest paid employees outside of your leadership team.  In addition, an outsourced team never plans a vacation, takes an unexpected sick day, or fails to cover an emergency on evenings, weekends, or holidays.  More important, through economies of scale, outsourced tech teams must continuously sharpen skills and train on the latest technology to remain relevant in the marketplace.  Internal IT staff have a tendency to get siloed within an organization, which leads either to laziness/lack of efficiency or boredom and resignation.  Finally, an outsourced team leverages the experience gained in many different networks of various sizes and complexity.  That experience leads to better designed solutions executed more efficiently.

If a completely outsourced solution isn’t the right fit, consider a co-managed partnership with a vendor.  In some cases, a virtual CIO can offer knowledgeable guidance for an efficient, productive internal team.  While the internal group manages the Help Desk and other basic, but critical processes, a virtual CIO may leverage experience across environments or provide expertise in your particular industry.  Alternatively, if you already staff a resourceful tech leader, consider outsourcing basic, but critical processes, such as server/workstation backups, Windows patch management, and Help Desk.  Either way, focus on the existing team’s core competencies and make certain that all parties spend the time and energy on the tasks only they can do best.

Dynamic Edge Can Help

Since 1999, Dynamic Edge has helped hundreds of small and mid-sized businesses maximize the return on their technology investment.  Contact us today for a free network assessment, so that we may help you navigate the short-term economic uncertainty and plan for a prosperous future.