Power Outages & Brownouts Secretly Hurting the Bottom Line

Updated March 8th, 2017: High winds this morning has caused a power outage in much of West Michigan. As many as 5,000 customers were without power before noon, and nearly 125,000 across the state are without power.

Between 2000 and 2013, average grid outages in the U.S. rocketed from 2.5 per month to 21.7 per month. The US Department of Labor estimates that power outages cost $80 billion per year and that 73%, or $57 billion, of those losses come from the business sector and 25%, or $20 billion, come from the industrial sector. A typical convenience store/gas station, for example, can lose about $445 per hour in revenue.

But lost revenue alone does not tell the whole story.

Power Outage Effects

Power outages not only affect sales, they can also affect the technology systems, data and hardware businesses use in their day-to-day operations. They cause electrical surges damaging or even destroying hardware, both servers and workstations. The costs of acquiring new hardware and hiring qualified personnel to install and configure that hardware can easily run into the thousands of dollars for small businesses and tens-of-thousands for medium- to large-businesses.

New hardware, servers, computers and other devices, can be purchased, but recovering data from the damaged devices can take several weeks and in worse case scenarios may not even be possible. Any data not properly backed up can be lost for good costing much more than a few thousand dollars in hardware.

Hidden cost of Power Outages

I took some time to talk with fellow Newminder Matt Vollmar, whose had years of experience delivering managed IT services and he said, “Business data is the real lifeblood, including, customer/client information, financial records, HR & employee information, etc. Losing business data can put a business in a position where it cannot continue to operate. What’s more, a data loss can significantly damage the reputation of a business.”

Exactly how costly is a power outage? According to the United Kingdom’s Department of Trade & Industry (DTI) and Price Waterhouse Coopers (PWC), 70% of businesses that experience a major data loss will go out of business. A Pepperdine University study found that each data loss instance can cost about $4,000 for small- to medium-sized businesses(SMB). Larger businesses may be able to weather these costs, but as power outages are common occurrences, small- to -medium-sized businesses may find themselves in deep water.

How to combat Power Outages

We recommend implementing the following disaster recovery & business continuity solutions to help combat data loss from power outages, hardware failure, and natural disasters:

• Regular data backups Its important to backup your data frequently. A lot can happen in a month and if you’re only backing up monthly you may lose so much data you will not be able to stay in business.
• Redundant Backup Hardware is not infallible and will fail eventually. Maintaining multiple backups will ensure that you will have a source to restore servers and business-critical data.
• Storing Backups off-site Storing a backup 20 miles or farther from your day-to-day operations can help to protect it from being damaged by the power outage.

Power outages are common occurrences and can have a damaging effect on a business. Implementing a disaster recovery and business continuity plan now can save your business thousands of dollars and mean the difference between staying in business or closing your doors for good.

If you suffer internet service outages regularly, you should also read up on common precautions and responses in our post: Level 3 Internet Outage Takes the US Offline: What to do next