Data Breach Prevention Guide for Small Businesses

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Article Contents
By Vitalii Starov
Updated on November 05, 2025

3 minute read

Article Contentstable-of-contents

For many small business owners in Canada, cybersecurity can seem like a “big company” problem. But today’s cybercriminals are targeting smaller businesses more than ever, and when a breach happens, the financial and operational fallout can be far more serious than most owners expect.

Data Breaches and Small Businesses At a Glance

  • A report by the Insurance Bureau of Canada (IBC) found that 41 % of small businesses in Canada that had suffered a cyber attack reported that it cost at least $100,000.
  • A cyberattack shut down the 12-lawyer Ottawa firm MBC Law for nearly four weeks, disrupting cases and incurring an estimated $80,000 to $200,000 in recovery costs.
  • 43% of respondents in a recent Canadian Internet Registration Authority (CIRA) study say their organization has made changes to its cybersecurity approach in response to news about major cyber attacks.

Why Small Businesses Are Now Prime Targets

Today, small and medium-sized businesses (SMBs) in Canada have become the new favourite targets for hackers because they’re easier to breach and often less prepared to respond. Let’s break down the biggest reasons why small businesses across Canada are now prime cybercrime targets:

  • Automation of attacks: Attackers use software tools that sweep for unpatched systems or weak credentials automatically, so being “small and off the radar” no longer protects you.
  • Lower defences: Smaller businesses often lack dedicated IT or security staff, sophisticated monitoring, or strong malware and patching procedures, making them easier to attack.
  • Valuable data: Even a small business holds customer data, billing records, and supplier info, which are all things attackers can easily exploit or sell.
Small Businesses_The New Cybercrime Hotspot

Preventing a Data Breach: What You Can Do Today

If you’re an SMB owner, here are things you can do to protect your business:

Start with basics:

Use strong, unique passwords, enable multi-factor authentication (MFA) where possible, and apply system updates and patches promptly.

Train your team:

Make sure staff know what phishing emails look like and what to do if they suspect an issue.

Back up your data:

Regular backups (offline or off-site) mean restoration is faster and ransom risk is lower.

Have a simple incident response plan:

Know who to call (IT person, lawyer, insurer), how to communicate with customers, and how to recover systems. 

Consider cyber insurance:

Check if your business insurance has cyber insurance, and if it would make sense to get it based on your business size, data exposure and risk profile.

How Cyber Insurance Premiums Compare to Potential Losses

Basic cyber-liability insurance for small Canadian businesses can start at $500 to $1,000/year. Compared to the cost of a breach reaching $100,000 or more, the benefit becomes clear.

If you pay $1,000/year for insurance and reasonable cybersecurity measures, and that helps you avoid or reduce a breach costing $100,000 or more, that’s still high value. In other words? Premiums are modest relative to potential losses, so it makes sense for most small Canadian businesses to at least look into cyber insurance.

The True Cost of a Data Breach for Businesses in Canada

When a data breach hits, the impact isn’t limited to just paying for IT fixes or replacing a few computers. The costs stack up quickly, and they can hit every corner of your business. Let’s break down the key areas where Canadian small businesses feel the biggest impact:

Direct Financial Costs

Once a breach is detected, businesses often need to hire cybersecurity specialists to contain the incident, identify the cause, and restore affected systems. These experts don’t come cheap, and neither does downtime while your business is offline.

Then there’s the cost of notifying customers, credit monitoring services, and public relations efforts to control the damage. Even if you recover quickly, the financial toll can easily exceed what many small businesses can absorb.

Legal & Regulatory Costs

Canada has strict privacy and data protection laws. Under federal legislation like the Personal Information Protection and Electronic Documents Act, businesses that experience a data breach must notify both affected individuals and the Office of the Privacy Commissioner of Canada (OPC).

Failure to do so can result in fines, penalties, and legal fees. Additionally, small businesses may need to hire lawyers to handle potential lawsuits or resolve disputes with affected customers.

Reputation & Customer Loss

The damage to your reputation can be harder to quantify and often lasts longer. In a recent CIRA study, 26% of respondents reported that cyber incidents resulted in lost customers, and 28% stated that their reputation was damaged. That loss of trust can translate into reduced sales, fewer repeat clients, and negative online reviews, all of which take months or even years to rebuild.

Operational Disruption

The operational impact of a data breach can cripple day-to-day activities. Many businesses find themselves unable to access key systems, payment tools, or customer records while IT teams work to contain the breach.

Even after systems are restored, lingering issues like corrupted data or lost emails can create long-term inefficiencies. The hidden costs of downtime, like lost sales, frustrated clients, and overworked staff, can be just as damaging as the direct financial loss.

Key Advice from MyChoice

  • Outdated software is one of the easiest ways hackers get in. Schedule regular updates for operating systems, apps, and antivirus software.
  • Limit access to sensitive information. Not every employee needs access to all your systems or customer data.
  • Change default router passwords and ensure your business Wi-Fi is encrypted.

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