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The Hidden Costs of Internet Downtime: Calculate Your Losses and Protect Your Business

5 Mins read

As a business owner, you know that time is money. But have you ever stopped to think about the true financial impact of unexpected internet downtime? Going offline can be devastating for your bottom line. From lost revenue and productivity to damaged reputations, it’s essential that you take the necessary steps to protect yourself and your online presence. It’s crucial to break down how to calculate the cost of internet outages, explain why having an appropriate continuity plan in place is so important, and provide guidance on constructing one. By preparing ahead of time, you can ensure that any potential disruption remains minimal – giving your business a much-needed edge over its competitors!

The True Cost of Downtime

According to Dun & Bradstreet, nearly 60 percent of Fortune 500 companies experience at least 1.6 hours of downtime weekly. With Gartner estimating the average cost of network downtime at around $5,600 per minute or $300,000 per hour, it’s critical to calculate the potential impact on your business. There are several formulas that could help you estimate the true cost of losing internet access.

The Downtime Formula

Calculating the cost of downtime involves four main components: lost revenue, lost productivity, recovery costs, and intangible costs.

To calculate the cost of your downtime per hour, you need to combine all four of these factors.

Lost Revenue

Determine your hourly revenue by dividing your weekly revenue by 40 hours. Next, estimate the percentage of your revenue dependent on internet uptime. You need to multiply your hourly revenue by the downtime duration (in hours). Finally, multiply this by your uptime percentage to get your total lost revenue.

Lost Productivity

To calculate your lost productivity, you need to calculate the hourly salary of each affected employee. Then, estimate their utilization percentage, which is the percentage of productivity dependent on uptime.

Multiply the employee’s hourly salary by the utilization percentage and the number of affected employees. This will give you your total lost productivity.

The total formula is the hourly employee salary multiplied by the utilization percentage and the number of employees you have.

Recovery Costs

Your recovery costs include repair services, replacement parts, lost data recovery, and miscellaneous costs due to data loss. Depending on the size of your business, your recovery costs could be substantial.

Intangible Costs

These are long-term damages that may not be immediately apparent, such as a damaged reputation or loss of customer loyalty. Intangible costs can have a significant impact on businesses that heavily rely on internet uptime. Even though they can be difficult to estimate, they are just as important when calculating the cost of downtime.

With a better understanding of the true cost of downtime, it’s time to develop an internet continuity plan to minimize these potential losses.

The Importance of an Internet Continuity Plan

When your business relies on internet access for its daily operations, you need an effective continuity plan in place. That way, if the unexpected happens and your internet connection drops unexpectedly, you’ll be prepared to keep things running smoothly. There are a few steps you follow to create a robust plan::

To create a robust internet continuity plan, follow these steps:

  1. Identify critical systems and processes: Start by making an inventory of all the most important systems and processes that rely on having reliable online access. This includes customer transactions, communication channels with staff or vendors, and essential inventory items.
  2. Assess potential risks: What could potentially cause disruptions? Think about natural disasters as well as human error. Also, consider any outdated hardware or software that might put your system at risk of crashing unexpectedly.
  3. Develop backup solutions: To protect yourself from downtime when it matters most, invest in options like backup generators, cloud-based data storage services, and mobile phones that can help you stay connected in an emergency situation.
  4. Establish a communication plan: Create guidelines around how quickly employees must notify customers and vendors concerning any outage issues.
  5. Train your team: Ensure your employees are familiar with the internet continuity plan and know their roles in case of an outage. All members involved should know exactly what steps they must take without hesitation during these moments of crisis management.
  6. Review and update your plan regularly: As technology advances over time, review this particular strategy periodically and make updates when needed.

Choosing the Right Internet Service Provider (ISP) for Downtime Protection

Selecting the right ISP is crucial in minimizing the impact of internet downtime on your business. To find an ISP that prioritizes your business’s continuity, several factors must be considered:

1. Wireless Internet Connectivity Backup

An ISP that offers wireless internet connectivity backup can automatically switch your business to a wireless network when your primary connection fails.

Ask: Do you provide wireless internet connectivity backup?

2. Backup Network Availability and Quality

Having access to a reliable backup wireless network is essential. Inquire about the network type and whether multiple backup networks are available to ensure maximum coverage and reliability.

Ask: What type of wireless network does it run on? Is a backup wireless network available?

3. Automatic Backup Activation

In the event of an outage, your ISP should be able to automatically activate the backup connection, minimizing downtime and ensuring a seamless transition.

Ask: Does backup kick in automatically?

4. Battery Backup and Duration

During a power outage, a battery backup can keep your internet connectivity operational. Ask your potential ISP about their battery backup offerings and how long they can maintain power.

Ask: Does the service include battery backup? If yes, for how long?

5. Surge Protection

Power surges can damage your equipment and cause further downtime. An ISP that includes surge protection can help safeguard your business when the power comes back on.

Ask: Is surge protection included for when the power comes back on?

6. Monitoring Service Status

An online portal or dashboard can help you monitor your service status, providing valuable insights into potential issues and allowing you to respond quickly to any disruptions.

Ask: Can we monitor our service status through an online portal?

7. Customer Support and Response Time

A responsive and reliable customer support team is essential in addressing and resolving any issues quickly, minimizing downtime.

Ask: What is your average response time for customer support? Are support services available 24/7?

8. Service Level Agreements (SLAs)

SLAs outline the performance guarantees and commitments made by the ISP. Review these agreements to ensure they meet your business’s uptime and performance requirements.

Ask: Can you provide a copy of your service level agreement? What uptime guarantees do you offer?

Think Carefully About the Cost of Internet Downtime, and Protect Yourself Accordingly

Yes, internet outages can be costly. Protect your business from these risks and make sure it remains operational during challenging times by calculating potential losses that could come with internet downtime. Then, take proactive steps to ensure continuity through prudent investments in services, like an ISP that prioritizes dependability. The factors above can help you make the right choice.

The true cost of internet interruption is not always readily apparent. Consider every angle when assessing its effects on your bottom line. Make sure you are well informed about your chosen ISP’s offerings before committing to them, as due diligence can minimize any negative impacts related to unexpected outages or slowdowns. With the right safeguards in place, you will have peace of mind knowing that your company is prepared for anything that might happen next.

Greg Davis is the CEO of Bigleaf Networks, a leading provider of network optimization solutions. Davis has a record of scaling businesses through revenue growth, operations, and strategic acquisitions. He has 25+ years of tech leadership, leading start-ups to $100M+ in annual revenue. He has been on the board of directors for Bigleaf Networks since 2020.

Internet downtime stock image by Smile-Sky Ztudio/Shutterstock

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