What Is Encryption? Why Is It Important for Your Small Business?

According to GetApp’s 2022 Ransomware Impacts Survey*, 62% of businesses have faced at least one ransomware attack, and 31% have paid a ransom of up to $10,000 to recover their data. These consequences could have been avoided if the businesses had used encryption.

Encryption is a security mechanism that helps prevent breaches by making your business data unreadable to unauthorized users. If you’re a small-business leader struggling to secure your company data due to limited experience in IT and security, encryption could be the answer to your cybersecurity concerns.

In this article, we explain everything about encryption—from what it is and how it works to why your small business should use it for day-to-day operations. With the right encryption mechanism, you can build a solid security wall around your business.

Encryption is a way of converting business information, such as your customer data, financial files, and confidential emails, into an encoded form that can be decoded only with a unique decryption key. It's like a safe lock that you can open only if you have the right combination.

Encryption works by using a cipher—i.e., a set of rules that replaces and rearranges the letters in a message to conceal its original meaning. The ciphered message is in an unusable form, and hackers can’t read or use it unless they have the decryption key, which is provided to the user at the time of encryption.

Messaging apps such as WhatsApp come with built-in encryption that uses ciphers to keep your conversations private. Here's an example of how a ciphered message may look after encryption:

Original message: Hey, what's up?

Encrypted message: Qnu, nv dqg pq?

According to our 2022 Data Security Survey**, unencrypted data is one of the top security vulnerabilities small businesses face today, and it can become the most evident reason for a data breach. Data encryption converts your business’s plaintext data into coded ciphertext, preventing hackers from being able to read or use any stolen data and minimizing the damages caused by a breach.

Our 2022 privacy-focused consumer survey reveals that a whopping 84% of consumers believe that how a company handles its data reflects how it will treat its customers***. That’s another reason your small business should invest in data encryption: It demonstrates to customers that you take data security seriously, safeguarding their trust in your brand.

Here’s how else data encryption benefits your small business:

• Protects against cyberthreats: Data encryption makes it harder for cybercriminals to intercept your data. They would need to break into your system and crack your encryption algorithm, which is a much more difficult task.

• Nullifies brute-force methods: If someone does manage to access your system unlawfully, they won't be able to see anything unless they employ brute-force methods, which involve guessing passwords until the correct one is found. This can take a long time, so it's less likely that someone will be able to access your data using this method.

File encryption converts your files into a secure, unreadable format to ensure their security while in storage or transit. You can use file encryption to:

• Safeguard data from unauthorized users: Sensitive data stored on servers and computers can be vulnerable to hacking attacks. Encrypting your files keeps your confidential data safe from such threats.

• Protect personal information: If your documents or spreadsheets contain personal data, you should encrypt them to keep the information private, especially if you plan to share the files with third parties.

• Secure files transfer between devices: If you have to transfer files between devices, it's a good idea to encrypt them first. Doing so will ensure your files are safe, even if they are intercepted during transmission.

Email encryption helps prevent phishing attacks, a type of online scam where attackers trick people into revealing sensitive information, such as passwords or financial information, by disguising themselves as trustworthy sources via email or other types of communication.

With email encryption, you can encrypt both incoming and outgoing email messages and attachments to safeguard your email data from phishing agents. You can also use email encryption to:

• Protect personal data: Your email messages may contain confidential information such as personal details. Email encryption helps keep such sensitive information safe from unauthorized access.

• Prevent malware or virus attacks: Hackers use spam emails to install malware on your systems. Email encryption authenticates email senders to reduce the risk of such attacks.

• Forward emails securely: If you need to forward an email to multiple recipients, use email encryption to ensure each recipient receives a unique, encrypted copy of the original message. This makes the encrypted email copies unusable for unauthorized parties.

End-to-end encryption (E2EE) encrypts a message at its origin and decrypts it only at its intended destination. It prevents unauthorized access during transmission by hackers or even unintended third parties, including internet and application service providers.

E2EE safeguards your business data as it moves from one end device or system to another. Here are the benefits of using it for your small business:

• Keep your messages private: With E2EE, no one besides you and your intended receiver have access to the encrypted data. This is because E2EE uses public-key cryptography, a feature that involves two keys—one for the sender and one for the receiver. Once your message is sent, the encryption key is destroyed, making it impossible for anyone else to read the message.

• Secure your information: When you use E2EE, your information isn’t stored on your computer but rather on the cloud (online storage such as Google Drive) with high-level security controls such as data backup, compliance, and user authentication.

• Stand against hackers: Hackers often target small businesses, as they may have fewer cybersecurity and data protection measures in place. By using E2EE for your business communication, you can make it harder for hackers to steal your data.

• Protect against identity theft: Identity thieves may try to intercept unencrypted messages to impersonate you and make unauthorized purchases in your name. E2EE helps prevent identity theft by making your messages inaccessible to any unwanted parties.

In this article, we've discussed why encryption is important for small businesses and the reasons you should use it in your daily operations. Encryption is a great way to protect confidential data from unauthorized access, and it helps mitigate the risks of unexpected cyberattacks on your small business.

If you’re an SMB leader who likes to think a step ahead and leave nothing to chance, check out these resources to strengthen your business’s cybersecurity posture:

• Cybersecurity Best Practices for Your Small Business

• 7 Encryption Methods To Shield Sensitive Data from Prying Eyes

• 3 Data Protection Technologies You Urgently Need: Backup, Encryption, and Blockchain

• How To Send Passwords Securely