The Most Common Compliance Mistakes SMBs Make - And How to Fix Them Fast
- 4 days ago
- 4 min read
Compliance is one of the biggest challenges facing SMBs in 2026, not because businesses don’t care, but because the rules feel unclear, the risks feel abstract, and the guidance is often written for large enterprises.
The result?
Most SMEs fall into the same compliance traps, and they don’t realise it until a customer asks for evidence, a supplier requests an audit, or a cyber incident exposes a gap.
Here are the most common compliance mistakes SMBs make, and how to fix them quickly
1. Relying on Passwords Instead of MFA
The mistake:
Staff still log in with just a password, even for Microsoft 365.
Why it’s a problem:
Passwords are the number one cause of SMB breaches.
The fix:
Enable MFA across all systems - it takes minutes and blocks 99% of credential attacks.
2. Not Removing Access for Leavers
The mistake:
Former employees still have access to email, files, or shared systems.
Why it’s a problem:
It’s a compliance breach and a security risk.
The fix:
Implement a joiners‑movers‑leavers process with same‑day access removal.
3. No Evidence of Backups Being Tested
The mistake:
Backups exist, but no one has tested a restore.
Why it’s a problem:
If you can’t restore, you’re not compliant — and you’re not protected.
The fix:
Test restores monthly and document the results.
4. Unsecured Microsoft 365 Tenants
The mistake:
Assuming Microsoft 365 is secure “out of the box.”
Why it’s a problem:
Default settings leave data exposed.
The fix:
Review conditional access, sharing settings, mailbox rules, and admin roles.
5. No Staff Cyber Awareness Training
The mistake:
Training is ad‑hoc or hasn’t been done in years.
Why it’s a problem:
Human error causes most breaches.
The fix:
Deliver annual training and run phishing simulations.
6. Policies That Exist - But No One Follows
The mistake:
Policies are written once and forgotten.
Why it’s a problem:
Regulators expect policies to be used, not stored.
The fix:
Review policies annually and make them accessible to staff.
7. No Supplier or Third‑Party Access Controls
The mistake:
External partners have ongoing access to systems.
Why it’s a problem:
Supply chain attacks are rising fast.
The fix:
Review third‑party access quarterly and remove anything unnecessary.
8. No Incident Response Plan
The mistake:
Teams don’t know what to do if something goes wrong.
Why it’s a problem:
Delays increase damage and breach severity.
The fix:
Create a simple, step‑by‑step incident plan and share it with staff.
9. Compliance Isn’t Documented
The mistake:
You’re doing the right things, but can’t prove it.
Why it’s a problem:
Compliance is about evidence.
The fix:
Store logs, reports, training records, and policies in one central location.
10. Assuming Compliance Is “One and Done”
The mistake:
Businesses treat compliance as a project, not a process.
Why it’s a problem:
Regulations, threats, and systems change constantly.
The fix:
Review compliance quarterly and update controls as needed.
The Real Cost of Non‑Compliance for SMBs (2026)
Most SMBs underestimate the financial impact of non‑compliance - and overestimate the cost of prevention. The truth is that even a single compliance failure can create a cascade of costs that far outweigh the investment required to stay compliant.
Here’s what non‑compliance really costs small and medium‑sized businesses in 2026
1. Direct Financial Losses
According to the UK Government Cyber Security Breaches Survey 2025, the average cost of a cyber breach for an SMB is:
£1,650 for micro businesses
£5,830 for small businesses
£22,700 for medium‑sized businesses
These figures only reflect immediate financial loss - not long‑term damage.
2. Operational Downtime
Downtime is one of the most expensive consequences of non‑compliance.
Industry reporting (Microsoft Security Blog, CSO Online) shows:
SMBs lose £3,000–£10,000 per hour of downtime on average
60% of SMBs experience multiple days of disruption after a serious incident
1 in 5 SMBs never fully recover from a major cyber event
Compliance gaps - especially around backups, access control, and incident response - are the leading cause of extended downtime.
3. Lost Contracts & Failed Tenders
More customers now require:
Proof of Cyber Essentials
Evidence of MFA
Supplier risk assessments
Documented policies
Incident response plans
SMBs without these controls are increasingly excluded from tenders, especially in:
Professional services
Finance
Manufacturing
Charities
Supply chain‑heavy sectors
A single lost contract can cost far more than compliance ever would.
4. Higher Cyber Insurance Premiums
Insurers now expect:
MFA
Secure backups
Endpoint protection
Staff training
Documented policies
Without these, SMBs face:
Higher premiums
Reduced coverage
Denied claims
Many insurers now refuse to pay out if basic compliance controls weren’t in place at the time of the incident.
5. Regulatory Penalties
While SMBs rarely face maximum fines, the ICO can still issue:
Fines up to £17.5 million or 4% of global turnover (GDPR)
Enforcement notices
Mandatory audits
Public reporting requirements
Even small fines can be devastating for SMEs operating on tight margins.
6. Reputational Damage
Industry data shows:
40% of customers stop doing business with a company after a breach
SMBs take 9–18 months to rebuild trust
Negative press or public reporting can permanently damage local reputation
For East Midlands businesses, where word‑of‑mouth is powerful, this impact is amplified.
7. Long‑Term Productivity Loss
Non‑compliance often exposes deeper issues:
Poor processes
Unmanaged access
Outdated systems
Lack of governance
Shadow IT
These inefficiencies cost SMBs thousands each year in:
Wasted time
Duplicate tools
Manual workarounds
Staff frustration
Increased support tickets
Compliance isn’t just about avoiding fines - it’s about running a more efficient business.
The Bottom Line
Non‑compliance is far more expensive than compliance.
A single incident can cost an SMB:
£10k–£50k+ in direct and indirect losses
Weeks of disruption
Lost customers
Higher insurance premiums
Long‑term reputational damage
Most of these costs are preventable with basic controls - MFA, secure backups, staff training, documented policies, and proper Microsoft 365 configuration.
Conclusion
Most SMB compliance failures aren’t caused by negligence - they’re caused by uncertainty, lack of clarity, and limited time.
The good news
Every mistake on this list can be fixed quickly with the right processes, tools, and support.
If you want to understand your compliance gaps - and fix them fast - Somerbys IT offers a free Security Assessment for East Midlands businesses.
0333 456 4431 | info@somerbysit.co.uk | www.somerbysit.co.uk
