Business operations do not always go according to plan. When employees must stop their work, the company could lose more than vital revenue. Entrepreneurs should learn how downtime affects their bottom line to enact preventive measures that make their businesses more competitive and profitable.
When people think about an enterprise pausing operations, they might imagine it is because a machine broke or a worker made a technical mistake. There are many other reasons why production could freeze and cause direct financial losses for brands of all sizes.
People with bad intentions know that some facilities are digitally vulnerable. They will conduct attacks with corrupted email links or denial of service tools while hoping they gain access to sensitive information they can hold for ransom or sell.
The average data breach cost $9.44 million per U.S. business in 2022. Company owners could lose revenue even after paying the initial damages because customers will go elsewhere if they know their personal data is vulnerable.
Factors outside any entity owner’s control — like global shortages or supplier insolvency — can cause restock failures. Production has to stop if there are no usable materials. Preparing for a similar situation is crucial to protecting the bottom line.
The U.S. Department of Energy notes that weather-related power failures have increased nearly 80% since 2011, which may not change soon. Global warming is an ever-present challenge. If the local electric grid fails due to high demand or damaged equipment during extreme weather, enterprises cannot continue operations until the power company fixes the situation. Extensive damage could require days or weeks to repair.
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Stopping services or production can hurt a business in the short and long term. Decision-makers should understand the whole picture to motivate themselves to take proactive measures.
Leaders can increase their property’s security to prevent theft-related downtime, but they cannot stop every factor that affects production. Widespread illnesses could keep numerous team members within one department at home. They could also go on strike. Regardless of what temporarily shuts it down, the company will lose revenue until everyone finds a solution.
People remain on the work clock even when they cannot do their jobs. They still need their paychecks even if they are waiting for an equipment repair service or power restoration. Downtime revenue loss makes that more challenging, especially for small operations with minimal financial reserves.
If the general public relies on an enterprise’s products or services in real time, they will notice when downtime happens. Social media companies become unreliable if their websites are unavailable and do not reload quickly. Their reputations take a hit, which may not be retrievable if customer dissatisfaction is high. While excellent marketing uses fundamental brand-boosting strategies to improve how the public feels about a brand, recurring downtime could prevent it from being effective.
Machinery problems that stop operations will likely require repairs or a complete replacement. Both are investments, as the entity may need new hardware or software to fix the problem. Costly replacement parts may be expensive for specialized equipment.
If the original model is not available anymore, an even more costly upgrade could be necessary. The expenditures are additional fees during critical periods of lost revenue.
Service providers often have service level agreements (SLAs) with vendors. The contract arrangements define the accessibility details of that service between the provider and partner or customer. Companies may have to pay SLA fines if they break one of the four agreements they previously established.
No one can stop downtime from ever happening because some factors are outside a business owner’s control. Preventive measures can still help. Entrepreneurs should consider taking specific steps to safeguard their entites, such as:
Protecting a business’s bottom line is essential for anyone who relies on it. The owner can continue paying team members and providing critical services if they prepare for emergencies year-round.
Understanding what causes downtime and the adverse outcomes of not preparing for it gives business leaders a competitive edge. They will know how to enact preventive measures that fortify their companies, retain their brand reputations and save money.
* This post is written in collaboration with our guest contributor, who has financially supported its publication.
Cover Photo by Annie Spratt on Unsplash
Alex Quin is a full-stack marketing expert and global keynote speaker. Founder and Chief Marketing Officer of UADV Marketing - a member of the Forbes Agency Council.
