Any entrepreneur must plan for the risks of getting into the business. Just like with any other business, owners of young tech companies will face risks in the industry. Competition in the technology industry is fierce, and with over 557, 000 tech companies currently operational in the country, the need to protect yourself as a young entrant is pronounced. While there is great potential for success, thanks to the current acceleration of consumer preferences towards a digital world, there are also potential problems a technology business must work to anticipate, prevent and protect against so that it can achieve success in the long run.
Get The Right Insurance To Protect Your Physical And Digital Property
One of the best ways to protect your tech business against potential risks is to secure specific insurance coverage. While insurance does not replace the necessary safeguards to prevent these risks, it does help to keep the business afloat if they materialize. Most startups opt to secure property, natural disasters, and employee insurance. While these are necessary, tech businesses may also want to consider cyber liability insurance, which covers the business against any losses due to a data breach or hacking.
Cyberattacks can cost companies around $200,000 now, according to a survey by Hiscox. Approximately 43 percent of them are aimed at small businesses and startups, including young tech startups. Also, owners of a tech startup may want to add interruption coverage to their insurance policy to protect against any losses experienced during unexpected closure like a data breach. According to Cerity Insurance, policies like general liability, property, and interruption insurance are not mandated by law in all regions, but they are recommended, since many leases or working contracts may require them.
Implement Safeguards Against Lost Data
Lost data can be potentially catastrophic for tech businesses. Unlike businesses with physical products, data is a key resource and asset for tech businesses. Exposure, theft, or loss of data can leave the business vulnerable, damage key business relationships, and harm the business’ reputation. In fact, one in five businesses shut down when attacked by ransomware. Some of those closures end up being permanent. For the others, each day they are closed, the business loses thousands of dollars in revenue. In a study by the Ponemon Institute in 2018, the average cost of an attack was found to be $141per data record. In 2020, another study by IBM and the Ponemon Institute pegged the average cost at $2.86 million and 280 days to identify and contain the breach.
Investing in cloud computing or big data storage is a good start. It is also recommended that tech businesses have a continuously operational backup in a secondary location – one that is not exposed to the same environment and risks like hacks or floods. Finally, remember to encrypt the information that your business stores. If your data storage and security measures are hacked, encryption provides that extra layer of security to make your files unreadable in most cases.
Don’t Forget To Protect Your Intellectual Rights As A Tech Business
As a fledging tech business, you will be hard at work building your brand in the technology industry. This includes establishing your business through logos, your IP, and even your initial tech development idea. These assets are prime targets for duplication and the theft of potential market share, either through someone duplicating your idea or infringing on your databases. To ensure your intellectual rights remain protected, it is recommended that young tech businesses move to copyright their software, ideas, and design rights as soon as possible in the process – and certainly before any products hit the market. Businesses need to apply to the U.S. Copyright Office to do this. However, the regulations state that your work is protected once it is created and fixed in a tangible form, so be sure to keep all design drafting documents and databases as evidence as well.
These are just a handful of ways you can protect your new and growing tech business from common issues that may arise. While there is a chance that they may not occur, it helps to be prepared should they ever do so. Finally, remember to review your risk profile regularly. The industry is constantly changing, and so are the risks that young tech businesses face every day.
