Small business owners feel less confident about their ability to survive a catastrophe now than they did just 12 months ago.

According to the research conducted by Dell at the annual FSB conference, just 59% believe their organisation would be able to cope with an unexpected event such as a flood, terrorist attack, fire or other disaster. This compared with a figure of 69% in 2006.

The research discovered that two-thirds of businesses have a back-up and recovery plan in place but only 34% test these on a monthly basis. A further 9% only test once a year and 9% fail to test at all, meaning such plans may prove to be lacking when they are most needed.

“Small businesses are under an intense amount of pressure to remain competitive, as demonstrated by the 36% of businesses who cited lack of time as the main reason for not having a back up and recovery plan in place,” said Erin Nelson, director of marketing for Dell’s small and medium business division.

“Data loss and the potential associated financial fallout can be a lot more difficult for a smaller business to absorb and recover from, so it is especially important for companies in this sector to have effective, reliable disaster recovery strategies in place,” he warned.

The research also revealed discrepancies in companies’ provisions for storing and backing up vital data. Four-fifths (81%) of those surveyed admitted to storing business-critical information on internal storage devices such as PCs and servers, which could be vulnerable if premises were hit by an incident.

And while 62% claim to back this up off-site on a daily or weekly basis, 20% admitted to know knowing how often their data is backed up and a further 10% said they never backed up this information.

There was more positive news in terms of security, however, with 78% using passwords to protect key devices. But almost half (48%) said they failed to change their passwords on a regular basis.

“It is important small firms put in place security systems and policies which work in harmony to minimise potential security risks, both external and internal, without limiting flexibility,” said Peter Scargill, FSB national IT chairman.

“In addition to regularly changing passwords, hardware authentication methods should be multi-layered and passwords as hard to crack as possible, in order to be effective.”