As a small business owner, you’re an expert at managing risk. You vet your employees, secure your workplace, and insure your assets. But what about one of the biggest, most overlooked threats to your operations, finances, and reputation?

I’m talking about your vendors.

From your payroll software and IT provider to your key material supplier and payment processor, you rely on a network of third parties to run your business. You trust them to be stable, secure, and reliable. But what happens when that trust is broken?

For a Small or Medium-sized Business (SMB), a significant failure at a single, critical vendor isn’t just an inconvenience—it can be an existential threat.

This Isn’t Theoretical: Real-World Vendor Failures

It’s easy to think “that won’t happen to me,” but major vendor issues that impact thousands of SMBs happen more often than you think. Let’s look at a few recent examples.

1. The Supply Chain Cyberattack: The MOVEit Breach

• What Happened: In 2023, a vulnerability was discovered in a popular file-transfer software called MOVEit. Hackers exploited this flaw to steal massive amounts of data from hundreds of companies—including major banks, government agencies, and software providers—that used MOVEit to send and receive sensitive files.

• The SMB Impact: Your business may not have used MOVEit directly, but what if your accounting firm, your HR software provider, or a key corporate client did? Suddenly, your employees’ personal data, your company’s financial records, or your confidential client information could have been stolen through no fault of your own. This is a classic supply-chain cyberattack, where the weakness of one vendor becomes a crisis for everyone they do business with.

• Source: Reuters

2. The Financial Collapse: The Yellow Corp Bankruptcy

• What Happened: In August 2023, Yellow Corp, one of the largest trucking and logistics companies in the U.S., abruptly declared bankruptcy and ceased all operations.

• The SMB Impact: Thousands of SMBs relied on Yellow for shipping their products. Overnight, they were left scrambling. Their shipments were stuck in limbo, they had to find new, often more expensive, shipping partners on short notice, and their supply chains were thrown into chaos. This is a perfect example of how the financial instability of a critical vendor can directly halt your ability to do business.

• Source: Cota Systems

3. The Operational Outage: Payment Processor Failures

• What Happened: In late 2023, major payment processors, including Square, experienced significant outages that left merchants unable to process credit card payments for hours.

• The SMB Impact: For any retail store, restaurant, or e-commerce business, this is a nightmare scenario. During the outage, sales simply stopped. Customers were frustrated, revenue was lost, and business owners were left helpless, unable to transact. This highlights how a temporary operational failure at a single technology vendor can have immediate and severe financial consequences.

• Source: Forbes

From Reactive Panic to Proactive Protection

You can’t control your vendors, but you can control your awareness of their risks. Proactive vendor monitoring is no longer a luxury for large corporations; it’s a necessity for any business that wants to protect itself.

This means having visibility into the key risk indicators for your most important vendors:

• Financial Health: Are they financially stable, or are there signs of distress?

• Cybersecurity Posture: Are they protecting their systems (and your data) effectively?

• Legal & Compliance Issues: Are they facing lawsuits, judgments, or on a government sanctions list?

Your First Step: Understand Your Own Risk

The first step to managing risk is understanding it. You need to know which of your vendors pose the greatest potential threat to your operations.

That’s why we built SafeGuard VRM. We believe this level of protection should be accessible to everyone. You can start right now by using our free tool to assess your vendors.

Sign up for a free account, add your vendors, and answer a few simple questions. Our platform will provide you with an instant, prioritized list showing you exactly where your risks lie. No credit card required.

Don’t wait for a vendor’s problem to become your crisis.