5 Reasons Why Encryption is Important for Small Businesses

Small and medium-sized businesses (SMBs) are becoming prime targets for cyber threats, making data security a top priority. In 2025, encrypting sensitive business data isn’t optional—it’s essential for SMBs to stay protected. Here are five key reasons why encryption should be a fundamental part of every SMB’s data protection strategy.

Read more about the key aspects of SMB cybersecurity from this blog

Cyberattacks are increasing in frequency and sophistication, with SMBs being particularly vulnerable. In 2020, over 700,000 attacks against small businesses caused $2.8 billion in damages. Hackers often see SMBs as easy targets due to their limited security infrastructure. Malware is the most common type of cyberattack aimed at small businesses, accounting for 18% of attacks. SMB cybersecurity is more critical than ever, making small business encryption a necessary defense. Implementing strong file security for SMBs can prevent unauthorized access, ensuring SMB data protection even if a breach occurs.

Governments worldwide are enforcing stricter data protection laws, requiring businesses to secure customer and employee data. Regulations such as the General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA) mandate robust security measures, including encryption. Failing to comply can lead to hefty fines and legal trouble. By encrypting sensitive files, SMBs can meet regulatory requirements and avoid financial and reputational damage. However, only 14% of SMBs currently have a cybersecurity plan in place, highlighting the urgent need for stronger SMB data protection measures.

Not all data breaches occur due to external attacks; insider threats, whether intentional or accidental, can be just as damaging. Employees may mishandle data, fall victim to phishing scams, or misuse access privileges. Alarmingly, 95% of cybersecurity breaches are attributed to human error. Approximately 1 in 323 emails sent to small businesses are malicious, further increasing the risk. Encryption helps mitigate the impact of such threats by restricting access to only authorized individuals and ensuring that data remains secure even if leaked.

The shift toward remote work and cloud-based operations has increased the need for strong security measures. Employees frequently access company data from various locations and devices, making it important to protect information at rest and in transit. Small Business encryption ensures that sensitive files stored in the cloud or shared online remain protected from unauthorized access. With 51% of small businesses lacking any IT security measures and 43% lacking a recovery plan, encryption becomes even more critical in safeguarding operations.

A data breach can severely damage an SMB’s reputation, leading to loss of customer trust and financial setbacks. Studies show that on average, SMBs lose $25,000 due to cyberattacks, and 78% of SMBs worry that a serious cyberattack could put them out of business. Implementing encryption demonstrates a commitment to protecting sensitive information, fostering trust, and enhancing brand credibility. Businesses that invest in security measures are more likely to attract and retain customers in an increasingly data-conscious environment.

AxCrypt provides the best encryption solutions with advanced features for SMBs. With Group Management, businesses can efficiently manage user access. Key Sharing ensures secure collaboration without exposing passwords. Centralized Key Management simplifies encryption for teams, reducing complexity while enhancing security. By choosing AxCrypt, SMBs gain a powerful yet user-friendly encryption tool to safeguard sensitive data effectively. Investing in encryption today will secure your business for the future.