10 Small Business Cybersecurity Challenges

Small businesses rely on managed service providers (MSPs) to handle their IT and cybersecurity needs. However, this relationship isn't always straightforward. Some companies lack the technical knowledge to assess their security risk, and they trust their MSPs to fill the gaps. But MSPs themselves face challenges. These include balancing security services with limited resources, keeping up with changing threats and managing client expectations. This can create gaps in protection that put businesses at risk. 

Here are 10 risks small businesses face in cybersecurity and how to overcome them. 

1. Lack of Cybersecurity Expertise

Cybersecurity is often seen as something that falls solely on IT teams or MSPs to handle. However, cybersecurity is as much about people as it is about technology. Employees may reuse weak passwords or fail to recognize common phishing scams. For small businesses, employee and IT staff training is either an afterthought or nonexistent because they often operate with limited resources. As such, security may be addressed after an incident occurs. 

Sometimes, business owners assume that because they have an MSP handling their needs, cybersecurity is automatically covered. However, providers vary in their expertise and approach. Some may furnish comprehensive security awareness training, while others focus solely on infrastructure management.  

MSPs that want to provide value to their clients must educate their clients on threats. They can support training by: 

• Providing ongoing instruction tailored to the business's needs. 
• Running phishing simulations to test and improve employee detection skills. 
• Implementing security policies.

2. Dependence on MSPs

For small businesses, partnering with an MSP is often the most practical way to handle IT and cybersecurity needs. Most SMBs lack the in-house competence to manage network security. MSPs fill this gap by offering managed solutions, monitoring services and technical support. The effectiveness of this partnership depends on how well MSPs can deliver cybersecurity solutions. Not all MSPs specialize in security, and some may struggle to keep pace with sophisticated cyberattacks.

When small businesses place their full trust in an MSP without clear communication about security responsibilities, gaps in protection can emerge — not because the MSP lacks commitment, but because cybersecurity requires collaboration and ongoing education.

To provide maximum value for their clients, here's how service providers can differentiate themselves and ensure they're delivering the right solutions: 

• Adopt a security-first mindset by positioning cybersecurity as a core service. If MSPs are looking to add security to their toolbox or want to scale, they can partner with security specialists for support. 
• Define clear responsibilities to understand which aspects the MSP handles and what their clients should manage. 
• Regularly review and update security policies in collaboration with the client. 

3. Inadequate Cybersecurity Measures

Sometimes, cybersecurity takes a back seat to more immediate concerns. This may create an environment where cybersecurity measures are often incomplete, inconsistent or not enforced. Some business owners may assume that basic security measures are enough. But even minute security oversights can open the door to attacks. 

A common security weakness among small enterprises is poor password management. Many employees use simple, easy-to-guess passwords or reuse the same login credentials across multiple accounts. However, attackers exploit weak passwords through brute-force attacks. 

To close these gaps, firms should have MSPs help them: 

• Implement password management and multi-factor authentication (MFA).
• Encrypt sensitive customer data and restrict access to critical information.
• Regularly update and patch software. 

4. Pressure to Adopt New Technologies

Larger, well-funded MSPs typically drive market trends. They set expectations that their smaller counterparts struggle to meet. Private equity-backed firms have the capital, workforce and infrastructure to integrate new security solutions, bundle services and scale operations. This creates an expectation that all providers should offer the same level of cybersecurity protection. Smaller providers are often left with two choices — expand their cybersecurity services rapidly or risk falling behind and losing clients. 

Instead of rushing to adopt every new tool that hits the market, MSPs should take a measured approach by:

• Assessing internal expertise: Before adding new security services, they should ensure they have the capacity and personnel to support them. 
• Prioritizing quality over quantity: Rather than trying to offer every solution available, they should focus on a core set of services they can confidently manage. 
• Partnering with specialized cybersecurity providers: If an MSP lacks the in-house expertise for certain services, they can collaborate with external security specialists. 

5. Misalignment of Services and Expectations

Some MSPs may offer basic security measures, but they often lack advanced threat detection, incident response and compliance know-how. This gap creates a misalignment between what small businesses think they're getting and what providers can realistically serve. They may believe their MSP is handling all aspects of security when critical areas are not included in their service agreement. 

Some MSPs may focus on hardware and software security but neglect password management and MFA. Regardless of this misalignment, MSPs and clients must set realistic expectations in the following ways: 

• MSPs should clearly define their offerings. 
• Business owners must ask the right questions and understand their vulnerabilities. 
• MSPs should create strong password policies and MFA across all client accounts. 

6. Financial Strain From Tool Acquisition

Businesses are constantly pushed to adopt the latest security tools, often with the belief that more technology equals better protection. Yet, purchasing cybersecurity tools and solutions without the expertise to use and manage them can create more financial burdens.

Online security tools are sometimes marketed as must-have solutions for preventing attacks, securing sensitive data and ensuring compliance. However, small businesses and MSPs frequently underestimate the true cost of ownership. Besides the initial purchase price, expenses include: 

• Monthly subscription fees
• Staff training
• Ongoing maintenance and updates

Instead of stretching tools thin, businesses should focus on: 

• Equipping employees with cybersecurity knowledge.
• Choosing a few well-integrated, manageable solutions. 
• Partnering with specialized cybersecurity providers. 

7. Potential Data Breaches

Cybercriminals frequently go after small businesses because they lack the security infrastructure of larger enterprises. Inadequate cybersecurity measures increase the chance of a breach. Some small businesses may assume they don't have much valuable data or lack an understanding of their vulnerabilities. However, minor breaches can have consequences. A single exposed customer record can lead to identity theft, fraud or legal action. 

Cybercriminals aren't just after large sums of money. They also exploit weak security to gain access to bigger networks, spread malware or sell stolen data. If an MSP's client experiences a breach because of inadequate cybersecurity measures, the responsibility may fall on them.  

Here are some strategies to minimize risk: 

• Enforce strong password management and MFA. 
• Regularly update and patch software. 
• Train staff to recognize and report suspicious activity, social engineering attacks and phishing scams. 
• Develop a clear cyberattack prevention and response plan.

8. Loss of Trust

Small businesses rely on MSPs to protect their data and systems. However, when cybersecurity incidents occur, they shake the very foundation of trust between the client and its provider. Failure to safeguard business operations pushes clients to question their MSP's competence, leading to customer turnover, reputational damage and lost business opportunities. A loss of trust can stem from unrealistic promises or repeated security incidents.

MSPs can restore and maintain trust in the following ways: 

• Be honest about your capabilities.
• Keep clients informed about potential security risks, updates and improvements. 
• Provide strategic guidance, policy enforcement and ongoing support. 
• When a threat occurs, act immediately and provide clear guidance on the resolution process. 

9. Compliance Challenges

Industry regulations set strict standards for data protection, privacy and cybersecurity. Government regulations and cybersecurity requirements are ever-changing and require continuous effort, monitoring and adaptation. Unlike large enterprises with dedicated legal and compliance teams, SMBs often have limited internal resources to manage adherence. They turn to MSPs for help, expecting guidance, risk assessments and solutions. 

MSPs can support compliance by: 

• Educating clients on compliance requirements. 
• Offering compliance-focused security solutions.
• Assisting with documentation and audits.
• Providing continuous monitoring and risk assessments. 

10. Incident Response Limitations

The ability to respond to an attack can mean the difference between a minor disruption and financial and reputational loss. Yet, many businesses lack a cyberattack prevention and response plan. MSPs are typically the first line of defense in cybersecurity, but they don't all have the capacity to handle incidents, mainly due to a lack of expertise and response protocols. Without a strong response plan, businesses risk downtime, data loss, regulatory penalties and loss of customer trust. 

Here's how MSPs can strengthen incident response for their clients: 

• Develop and implement a clear incident response plan. 
• Train employees to recognize cybercriminal activities and prevention best practices.
• Assist with compliance and breach notification requirements. 

Partner With Phin for Small Business Cybersecurity Solutions

Phin Security makes cybersecurity simple, effective and hands-off. Our automated solutions protect your client's business from various threats. With our automation, easy setup and time-saving approach, you can focus on running your business. Our superior knowledge base, customer support and MSP learning materials ensure you stay ahead of threats. 

Contact us today to get started.