The cost of downtime varies from business to business. It really depends on how much you make and how much it costs you to operate your business. Because those bills are coming, whether your machine is up and running or not. And if you can’t service your customers, then you can’t make money.
Some downtime is inevitable. In this article, we explain what exactly downtime is and how to minimize it. That way, you ensure maximum revenue.
What is Downtime?
There are two different types of downtime: the good kind and the bad kind. The good kind of downtime is the time you have to yourself in between periods of work. With a finely tuned ATM business, you should be able to experience more and/or longer periods of downtime than you would have working a typical 9-5 job.
This is because an ATM business essentially runs itself. You make passive income, meaning your machine makes you money while you sit back, relax, and enjoy your downtime. However, this only happens if your machine is fully functional. Which brings us to the bad kind of downtime….
In the ATM industry, downtime refers to the amount of time that you aren’t able to provide your service to your customers. Downtime could refer to the time during which the equipment or machine isn’t functioning properly or any time during which service is interrupted or stopped.
That means that set-up time, repair time, and other unexpected obstacles create downtime—time that you aren’t able to generate revenue when you normally would be.
The cost of downtime, then, refers to the amount of money and resources you lose when your business is not functioning properly. Keep reading to find out how this applies to an ATM business specifically.
Causes of Downtime
We don’t need to tell you all of the things that can go wrong when operating an ATM business. You knew it would come with some risks, just like any business, when you started. But we will list some causes of downtime here and then explain how you can minimize your risk.
First of all, you experience downtime during the period of time between purchasing the machine and getting it up and running. Now, this downtime isn’t the result of any particular error, circumstance, or malfunction, but once you purchase that machine, it is your job to make your return on investment (ROI) so that you can start making a profit as soon as possible.
If downtime refers to the period of time that you aren’t able to provide service and make money, then this applies to the amount of time it takes for you to install, program, and test your machine. That’s why it’s important to make sure you have everything else in place before you actually receive that machine. The quicker you get it up and running, the less downtime you experience and the sooner you start making money.
Hardware and Software Issues
Once your machine is up and running, you could experience hardware or software issues. If something mechanical malfunctions or stops working, you have to stop service until the parts are fixed or replaced. If there is a software breach, your customer data is compromised, and you have to stop service until you improve your security.
Power outages, poor internet connection, and server instability can also disrupt service. Your ATM machine relies on these resources 100% of the time that it’s available to customers. It can’t do its job without them. So if anything happens to the connection, you will experience downtime until it is restored.
Downtime could also be the result of human error. You, your vaulter, or the location owner could load the machine incorrectly causing the wrong denominations to be dispensed. Or, someone could fail to load the machine at all. Without cash or receipt paper, your ATM cannot properly service your customers, and you will lose out on transactions until the issue is addressed.
Unfortunately, you will be at the mercy of the location’s availability if you don’t operate your machine out of your own space. That means that if the location has to close during hours when you normally operate your machine, you will lose out on transactions during that time. There could be flood, fire, construction, holidays, vacations, etc. that could cause the location to close and cut your machine off from usual customers.
How to Prevent Downtime Costs
Although there is a long list of things that can go wrong and cause you to experience the cost of downtime in your ATM business, there are ways to mitigate your risk of downtime and minimize the duration.
Make an Action Plan
The first thing you can do is be prepared. That is where the list of causes becomes helpful. While we hate to think of everything that can go wrong, doing so prepares us to handle anything that comes our way. So take a look at the list, and make a plan for handling the issue as quickly as possible.
Then, prioritize communication. Share your plan with the location owner, vaulter, and anyone else who helps you with your operation. Make sure that everyone involved knows what to do if something goes wrong.
You also want to communicate with your customers. Let them know what the problem is, when you expect to have it fixed, and maybe even provide contact information. This can help preserve your reputation by providing excellent customer service even when your machine isn’t available.
Minimize and Eliminate Potential Causes
This might go without saying, but you want to try to eliminate the potential causes of downtime costs as much as possible. For example, rather than use the location’s internet service provider for your connection, you can prevent unreliable internet connection by investing in your own ATM wireless device.
Increased security measures can prevent vandalism, theft, robbery, fraud, and other potential threats to your machine. Keeping your software up-to-date also improves security, customer service, and uptime (the time your business is fully operational). These are other proactive measures you can take to eliminate causes of downtime costs.
Utilize Your Resources
Don’t be afraid to ask for help. If something goes wrong, you might need to reach out to the location owner to fix it if you are unavailable. Or, if you need help diagnosing a problem or need technical service or advice, contact your ATM provider. (Hopefully you work with someone like ATMDepot who offers 24/7 customer service.)
You also want to make sure you utilize remote online monitoring. Your ATM company should provide you with access to a portal where you can set up alerts and track activity. Keeping tabs on your machine while you are away and getting real-time data and notifications allows you to jump on a problem as soon as it occurs, therefore minimizing your downtime costs.
Finally, reflect on and improve mistakes. There is a first time for everything. If and when something goes wrong, take notes and think about what you could have done better. That way, if it ever happens again, you are better prepared and can resume operations even quicker.
What is the Cost of Downtime for Your ATM Business?
A business’s risk of downtime is determined by the industry, size, and business model.
Downtime can cost large companies thousands of dollars every minute! Companies like Amazon, Apple, and Facebook are so profitable, though, that they can recover easily from mistakes and system outages. Smaller businesses, however, could be completely ruined from just one mistake.
This is due in part to the fact that the cost of downtime isn’t solely financial. There are other, intangible costs like a damaged reputation, stress, lower confidence, and decreased momentum. The smaller the business, the more impactful these intangible factors can be.
Categories of Downtime Costs
The cost of downtime factors in more than just monetary loss. Of course you aren’t making money when your machine is down, but what other costs do you have to consider?
In addition to lost revenue, you have to consider the cost of repairs. Do you have to pay a technician to come service your machine? Do you have to replace a cassette? Should you purchase a more secure lock?
And there are productivity costs. What will it cost you in time and money to have to stop what you are doing to address issues with your business? Will you incur extra travel costs? Extra stress? Will you have to sacrifice time spent at another job, on an additional project, or with family?
Then there are other intangible costs which have long-term effects. For example, if someone comes to use your machine, but it’s out of order, they might never return. So you lose transactions during downtime, you lose regular customers, and your reputation suffers.
You also want to consider your relationship with the location owner. If you share your transaction revenue with the location owner, he or she loses out on income and customers during downtime as well. If you experience too much downtime, you could compromise the agreement you have with the location. The owner could terminate your agreement or decide not to renew. That could be a potential long-term cost of downtime, too.
How to Calculate the Cost of Downtime
There are a few formulas businesses use to try to predict just how much they could lose every hour that systems are down. For example, they might add the amount of lost revenue to the amount of lost productivity and add the amount of recovery and intangible costs.
Lost revenue can be calculated by multiplying the amount of revenue made per hour by the number of downtime hours and multiplying that by the percent of time systems are relied on. Lost production equals the employee salary per hour times the percent of time they are utilized times the number of employees.
However, an ATM business is a little simpler. Since you are probably your only employee, and you rely on system operations for 100% of the time you are in business (your entire business relies on your machine functioning fully), you really just have to add the amount of lost revenue, the amount of recovery, and intangible costs to get a rough estimate of the cost of downtime for your ATM business.
It can be difficult to come up with an exact number for the cost of downtime for an ATM business. There are many factors to consider, and it’s hard to put a price on intangible costs. So to simplify, in most cases, the cost of downtime essentially equals the average amount of revenue generated in an hour multiplied by the number of hours your ATM is out of service.
There is a long list of things that can go wrong, and every business experiences periods of downtime. But if you are prepared, you can minimize your costs of downtime and continue to provide excellent customer service—your business depends on it!