As a business owner, you want to make sure you and your employees stay as productive as possible during working hours. When something goes wrong, it can cost you in a big way.
Calculating the Cost of Business Downtime
When you calculate the cost of downtime, you need to look at more than just lost revenue. Your total cost also includes your recovery costs, the cost of lost productivity, and other intangible expenses.
Lost Revenue
To calculate lost revenue, simply determine your weekly revenue and divide it by how many hours you operate each week. Multiply this by the number of hours your business was down and multiply your total by uptime. “Uptime” is simply the percentage of your business revenue that’s dependent on your internet access and other programs working correctly. For example:
$120,000 weekly revenue / 40 hours per week = $3,000/hr.
$3,000 x 8 hours downtime x 80% uptime = $19,200 in lost revenue.
Recovery Costs
Until you fix the problem, you will continue to lose revenue. Recovery costs include repair and replacement services, data recovery and other expenses. This can vary greatly depending on the situation.
Loss of Productivity
While your business is down, you won’t earn revenue, but you’ll still have to pay your employees. To calculate this cost, look at the number of employees you have, each employee’s hourly salary, and the percentage of each employee’s productivity that’s dependent on uptime.
Assume you have 10 employees who each make $25 per hour and all of their jobs are 50% dependent on uptime.
10 employees x $25 per hour x 8 hours downtime x 50% uptime percentage = $1,000 in lost productivity.
The Impact of Interruptions
You don’t need a full outage to experience a serious loss of productivity. Even if your systems are running slowly or are working intermittently, every time there’s an interruption, it costs you. This may include employees contacting you to let you know a system is down, taking calls from clients who would normally do their business online or stopping work to call your IT company.
Studies suggest after every interruption, we need approximately 23 minutes to get re-focused on the task at hand. This can add up quickly and end up costing your company greatly.
Intangible Costs
Your intangible costs can include the loss of a potential lead who has no patience for your 404 error, loss of customer trust, and issues with employee morale. If the interruption is serious enough, publicly traded companies may even see their stock prices plummet.
Reduce Downtime with Proactive Measures
While some causes of downtime, like power outages or natural disasters, can’t be avoided, you can still take steps to reduce damage. One of the most common problems is a lack of updated software programs and computer equipment. Fortunately, this hazard is easy to reduce or eliminate.
Many small and midsized business owners try to save money by avoiding investments in IT upgrades, but this can end up being a far costlier choice, as your data will not be protected, and your company will be vulnerable to cyber attacks. Contact us at 702-547-9800 to schedule a network security assessment.