How Small Businesses Can Improve Their Cybersecurity

Picture this: It’s Monday morning, and Sarah, owner of a 12-person digital marketing agency in Vancouver, tries to log into her company’s system. Instead of her usual dashboard, she’s greeted with a chilling message: “Your files have been encrypted. Pay $50,000 in Bitcoin within 72 hours, or your data will be deleted forever.”

Sarah always thought cyberattacks only happened to big corporations—companies with resources worth stealing. She was wrong. And she’s not alone.

About 73% of small businesses have already experienced a cybersecurity incident in Canada. Yet remarkably, only 6% of Canadian small and medium-sized business owners strongly agree that there is a chance their business is vulnerable to a cyber attack or data breach.

This dangerous gap between reality and perception is leaving Canadian small businesses exposed to threats that can—and do—shut them down permanently. Nearly 1 in 5 businesses that experienced an attack ended up closing or declaring bankruptcy.

If you’re a small business owner reading this, you need to understand one thing: you are a target, and the time to protect yourself is now.

Why Cybercriminals Love Small Businesses

Let’s be blunt: small businesses are low-hanging fruit for cybercriminals. The numbers tell a sobering story. 43% of all cyberattacks target small businesses, according to multiple industry reports, yet nearly 60% of small businesses have no cybersecurity plan in place. Most don’t have dedicated IT teams, advanced security tools, or formal training programs, which makes them significantly easier targets than large enterprises with robust security infrastructures.

But there’s another reason small businesses are attractive to hackers. Small and medium enterprises are often part of larger supply chains that make them potential entry points for cybercriminals targeting bigger companies. By compromising a smaller vendor, hackers can access their larger clients—companies that would be much harder to breach directly.

The rise of artificial intelligence has made these threats even more dangerous. 65% of surveyed small and medium-sized business owners and decision makers in Canada are concerned AI/new technology will make it harder to protect against cyber risks. Cybercriminals are using AI to create more sophisticated phishing emails that are nearly indistinguishable from legitimate communications, deepfake videos that can impersonate executives, and automated attack tools that can probe thousands of systems simultaneously looking for vulnerabilities.

The Real Cost of a Cyberattack

When we talk about the cost of a breach, we’re not just talking about ransom payments. The financial impact is multi-layered and often devastating. The average ransomware hit cost Canadian companies almost $2 million to remedy, while the average cost of a data breach in Canada is $5.4 million. These aren’t just numbers on a page—they represent businesses that had to lay off employees, shut down operations, or close their doors permanently.

The scale of this problem has been accelerating rapidly. In 2023, total spending on recovery from cyber security incidents doubled to $1.2 billion in Canada, up from approximately $600 million in 2021. That’s a staggering increase in just two years, reflecting both the growing frequency of attacks and their increasing sophistication.

Beyond the immediate financial hit, businesses face operational disruption while investigating and recovering from attacks. Systems go down, employees can’t work, customers can’t be served, and productivity grinds to a halt. Then there’s the reputation damage. 80% of SMBs said they had to rebuild trust with clients and partners after an incident, which can take far longer than restoring systems. When customers learn their data may have been compromised, they take their business elsewhere. When partners discover your security was weak, they reconsider the relationship.

Legal and regulatory costs add another layer. Businesses must notify affected customers, potentially face lawsuits, and may incur regulatory fines for failing to protect customer data adequately. For many small businesses operating on thin margins, these combined costs are simply insurmountable.

Understanding the Threat Landscape

The threats facing small businesses today are diverse and constantly evolving. Phishing attacks remain the most common entry point, with fraudulent emails or messages designed to trick employees into clicking malicious links or revealing passwords. Phishing and ransomware are the top threats facing small businesses, and they’re becoming increasingly sophisticated as criminals leverage AI to make their attacks more convincing.

Ransomware has emerged as particularly devastating. Ransomware is the top cybercrime threat facing Canada’s critical infrastructure, directly disrupting entities’ ability to deliver critical services. Ransomware attacks were reported by over 1 in 8 (13%) of affected Canadian businesses in 2023. These attacks encrypt your files and hold them hostage until you pay, and even when businesses do pay, there’s no guarantee they’ll get their data back.

Identity theft is another growing concern. Identity theft incidents rose by 11 percentage points since 2021, affecting nearly a third (31%) of impacted Canadian businesses. Criminals steal employee or customer credentials and use them to access systems, transfer money, or commit fraud in the company’s name.

One of the most overlooked threats comes from within. Three out of four employees admit to having taken at least one action that poses a cyber security risk. These aren’t malicious insiders—they’re well-meaning staff who click on suspicious links, use weak passwords, or access company data on unsecured home networks without realising the risk they’re creating.

The vulnerability of outdated software creates another major security gap. The 2023 MOVEit vulnerability cost organizations $10 billion by exploiting unpatched systems. Hackers actively scan for businesses running outdated software with known vulnerabilities, and when they find them, exploitation is often straightforward.

Supply chain attacks have also become more prevalent. 52% of global organizations reported ransomware hitting their supply chains in 2023, putting partners and vendors at risk. Your security is only as strong as your weakest vendor, making third-party risk management essential.

Building Your Defence: Essential Security Practices

Protecting your business doesn’t require a massive budget or a dedicated IT department, but it does require commitment and consistent effort. The foundation starts with multi-factor authentication. MFA blocks 99.9% of account compromise attacks, making it one of the most effective security measures available. Enable MFA for all employees accessing company systems—email platforms like Gmail and Outlook, cloud storage services like Google Drive and Dropbox, and any business applications. Use authenticator apps like Google Authenticator or Microsoft Authenticator instead of SMS codes when possible, as SMS can be intercepted.

Password security is equally critical. Weak passwords cause 80% of data breaches. Rather than trying to remember dozens of complex passwords, implement a password manager like 1Password, LastPass, or Bitwarden for your team. This allows everyone to use complex, unique passwords without the mental burden of memorisation.

Keeping software updated is one of the simplest yet most effective security measures. Having the latest security software, web browser, and operating system are the best defences against viruses, malware, and other online threats. Enable automatic updates on all devices and set a weekly patching schedule for operating systems, apps, and firmware. Those “update now” notifications that everyone ignores? They often contain critical security patches that close vulnerabilities hackers are actively exploiting.

Data backups are your insurance policy against ransomware and other data loss incidents. Backups are critical to recovering from ransomware. Follow the 3-2-1 rule: keep three copies of your data, on two different types of media, with one copy stored offsite. Use automated cloud backup services and test your backups monthly to ensure they actually work. A backup that fails when you need it most is worthless.

Network security starts with your Wi-Fi. Change default manufacturer passwords and create separate networks for guests. Use WPA3 encryption or at minimum WPA2, hide your network name from public view, and change the default router admin password immediately. Set up a guest network for visitors that’s isolated from your business network so a compromised guest device can’t access your business systems.

Access control is another fundamental principle. Restrict sensitive information access to only those who need it to do their jobs. Implement role-based access controls where an accountant has access to financial records but a sales rep doesn’t. Review access permissions quarterly and revoke access immediately when employees leave. Old employee accounts are a major security risk that many businesses overlook.

The Human Element: Training and Culture

Technology alone won’t protect you. You need a security-conscious culture where every employee understands their role in protecting the business. This starts with addressing a critical gap: 25% of employees don’t feel they have the tools and training needed to identify potential cyber threats at work.

Conduct quarterly cybersecurity training sessions that go beyond boring PowerPoint presentations. Run simulated phishing tests throughout the year to keep awareness high and help employees recognize real threats when they encounter them. Create a simple one-page guide on how to spot suspicious emails and make reporting suspicious activity easy and non-punitive. Employees should feel comfortable raising concerns without fear of being blamed or embarrassed.

Having written security policies is surprisingly uncommon. Just over a quarter (26%) of Canadian businesses had written policies for cyber security in place in 2023. Don’t be part of the 74% without one. Document policies covering password requirements, acceptable use of company devices, how to handle customer data, procedures for reporting security

incidents, and consequences for policy violations. Make these policies accessible and review them with new hires during onboarding.

When implementing new systems, begin by explaining the purpose and benefits in non-technical terms, and clarify what the system does, does not do, and should not do. This builds trust and prevents employees from circumventing security measures they don’t understand. Communication is key—make security everyone’s job, not just IT’s responsibility. Reward good security practices instead of only punishing mistakes, and lead by example with management following the same protocols as everyone else.

Physical Security and Device Management

Digital security starts with physical security. Store paper files or electronic devices with sensitive information in a locked cabinet or room. Installl security cameras in server rooms, use cable locks for laptops, and implement badge access for sensitive areas. Require employees to lock their devices when stepping away from their desks, and establish clear policies about what happens to devices when employees leave the company.

The shift to remote work has created new security challenges. Remote employees need encryption on all company devices, mobile device management software installled, and remote wipe capabilities enabled in case devices are lost or stolen. Prohibit storing sensitive business data on personal devices, and ensure employees understand the security requirements for working from home—including using secure Wi-Fi networks and maintaining physical security of their workspace.

Monitoring, Responding, and Recovering

Monitor your computers, devices, and software for unauthorized access and investigate any unusual activities on your network or by your staff. Enable logging on all critical systems, set up alerts for unusual login attempts or large data transfers, and review logs weekly. For larger operations, consider security information and event management tools that can aggregate and analyse security data from across your infrastructure.

Having an incident response plan isn’t optional anymore. Develop a plan for saving data, running the business, and notifying customers if you experience a breach. Your plan should include contact information for IT support, legal counsel, and your insurance provider. Document the steps to contain a breach, create communication templates for notifying customers, establish a business continuity plan for maintaining operations during recovery, outline procedures for working with law enforcement, and set a realistic recovery timeline.

Third-party vendors require special attention. Before signing contracts with new vendors, ask about their security practices and include cybersecurity requirements in vendor agreements. Limit vendor access to only what they absolutely need, monitor and log vendor activity, and review vendor permissions annually. 52% of global organizations

reported ransomware hitting their supply chains in 2023, making vendor risk management essential to your overall security posture.

The Role of Cyber Insurance

The cybersecurity insurance market has been growing rapidly as businesses recognize the need for financial protection. The use of cyber risk insurance has increased, with 22% of Canadian businesses now carrying such policies, up from 16% in 2021. These policies can help cover data recovery costs, legal fees, customer notification expenses, business interruption losses, and public relations costs to rebuild your reputation.

However, insurance isn’t a substitute for good security practices. Many insurance providers now require businesses to meet certain security standards before issuing policies—things like having MFA enabled, maintaining regular backups, and conducting employee training. Strong cybersecurity practices aren’t just protection; they’re often a requirement for coverage. Even with insurance, prevention is always better than recovery.

Common Mistakes That Leave Businesses Vulnerable

Perhaps the most dangerous mistake is complacency. More than 60% of small businesses believe their business is too small to be targeted by cyber criminals, rising to 73% for sole proprietors. This false sense of security leaves businesses completely unprepared when attacks happen—and they will happen.

Another critical error is treating cybersecurity as a one-time project rather than an ongoing process. Installling antivirus software and calling it done won’t protect you. Threats evolve daily, and your defences need to evolve with them. Regular security assessments, continuous monitoring, and staying informed about emerging threats are all part of maintaining a strong security posture.

Many businesses also make the mistake of relying on a single layer of defence. Antivirus software alone won’t stop a determined attacker. Effective security requires multiple layers—firewalls, encryption, access controls, monitoring, backups, and trained employees all working together. If one layer fails, others are there to catch threats before they cause serious damage.

Ignoring mobile device security is increasingly dangerous as more employees work remotely or use smartphones for business tasks. These devices are computers and need to be treated with the same security rigour as desktop workstations. Delaying software updates, using the same password across multiple accounts, and not testing backups round out the list of common but dangerous mistakes that put businesses at unnecessary risk.

Taking Your First Steps

If all of this feels overwhelming, start with a practical approach. Spend your first week taking stock of what you have—inventory all devices, software, and accounts; identify your most sensitive data; and review who has access to what. This assessment gives you a clear picture of your current security posture and helps prioritise improvements.

In week two, focus on quick wins that provide immediate security improvements. Enable MFA on all critical accounts, update all software and operating systems, and change default passwords on routers and devices. These simple steps significantly reduce your vulnerability to common attacks.

Week three is about building a solid foundation. Implement a password manager across your organisation, set up automated backups, and install business-grade antivirus software. These tools provide ongoing protection that doesn’t require constant manual intervention.

By week four, shift your focus to culture and planning. Conduct initial employee security training, draft basic security policies, and create an outline for your incident response plan. After your first 30 days, continue improving with monthly goals and regular reviews. Cybersecurity is a journey, not a destination, but taking these first steps puts you significantly ahead of most small businesses.

Frequently Asked Questions