Hacking, data security breaches and and computer viruses are preventing small companies from scaling to their full potential, according to the Federation of Small Business, which calculates its members lose £785m a year as a result of cybercrime.
The Federation's report — Cyber Security and Fraud report, based on a survey of 2,667 FSB members — revealed that 41 percent of respondents (1093 companies) had fallen victim to cybercrime in the past year, with the average business losing £3,926 a year.
The report found that the most common cyber threat to businesses was virus infections, with 20 percent of respondents (533 companies) complaining of viruses. Eight percent of respondents (213 companies) said they had been victims of hacking, while five percent (133 companies) said they had experienced security breaches.
The FSB warned the cost to the wider economy as a result of cybercrime could be even more profound as smaller firms refused to trade online because they were worried that the existing security framework did not offer adequate protection. Previous research by the FSB found that only a third of businesses with their own website used it to make transactions.
Despite the fact that a significant chunk of respondents had been victims of cybercrime, almost 20 percent of members surveyed (533 companies) said they had not introduced any new ways of protecting their business. A smarter 36 percent of members (960 companies) said they regularly installed security patches in an effort to protect themselves from fraud and almost six in 10 members said they regularly updated their virus scanning software to minimise their exposure to online crime.
Launching the report at an event in London on Tuesday, Mike Cherry, national policy chairman for the FSB, said that cybercrime posed a real and growing threat to small businesses that could not be ignored.
"Many businesses will be taking steps to protect themselves but the cost of crime can act as a barrier to growth," Cherry said. "For example, many businesses will not embrace new technology as they fear the repercussions and do not believe they will get adequate protection from crime. While we want to see clear action from the government and the wider public sector, there are actions that businesses can take to help themselves."
Cherry said that the FSB wanted government to look at how it could simplify and streamline its guidance targeted at small firms and make sure there was capacity for businesses to report when they had been a victim of fraud or online crime.
The Minister for Security at the Home Office, James Brokenshire, said that cybersecurity was a vital component of the government's National Cyber Security Strategy. "We need to make sure that all businesses, large and small are engaged in implementing appropriate prevention measures in their business," he said.