Most owners guess what an hour of downtime costs them. Four lines and one multiplication turn that guess into a number you can plan around.
When we sit down with a new owner at Circle Square, one of my first questions has nothing to do with servers or software. I ask what an hour of downtime costs the business. Almost every time, I get a guess.
Sometimes it’s a round number. Sometimes it’s a shrug and “a lot.” Sometimes it’s the monthly IT bill divided by something. None of that comes from carelessness. Owners are busy running the business, and nobody has ever taken the time to work through the math with them.
It matters more than it sounds. Without that number, technology decisions get made on feel. You buy the backup that seems reasonable. You skip the second internet connection because it seems expensive. You have no way to know whether either call was right.
Four lines, one number
We do the math with a tool we call the Downtime Ledger. It has four lines, and none of them require technical vocabulary. They require your numbers.
The first line is revenue that stops each hour. Take your revenue per working hour and multiply it by the share of that revenue that actually stops when systems go down. Not all of it stops. A law office might keep billing for thinking time while the network is out. A distributor whose order entry lives in one system might lose nearly all of it. Only you can answer what that share is for your business.
The second line is people idled, at loaded cost. That means wages plus taxes, benefits and everything else it costs to have that person in the seat, multiplied by the number of people who can’t do their jobs during the outage. This line tends to get undercounted, because the people are still in the building. They just can’t get anything done.
The third line is recovery expense per hour. Overtime to catch up. Outside help. Rush shipping to make good on what slipped. Whatever you spend getting back to where you would have been.
The fourth line is the tail. Missed deadlines. Credits you give customers to keep them happy. Contractual, regulatory or reputational exposure, whatever applies to you. The tail doesn’t always fit neatly into an hourly figure, but it belongs on the page, because it’s often the line that lingers longest.
Add the four lines and you have one number: what an hour costs you.
Then multiply
An hour’s cost is half the picture. The other half is how often it happens and how long it lasts.
So multiply. Your hourly cost, times the hours of disruption you’ve had in a typical year, tells you what downtime costs you annually right now. If you don’t know how many hours you’ve lost, that’s useful to learn too. It usually means nobody has been counting.
That annual figure is the real budget conversation. A lot of IT buying gets framed as cost per user: per seat, per month, per mailbox. That’s a fair way to see what you’re spending. It doesn’t show what you’re protecting. Once you can see both, the comparison gets much clearer.
Decisions get easier from there. A redundant internet line either costs less than the hours it saves or it doesn’t. A tested recovery plan either shortens an outage enough to pay for itself or it doesn’t. The conversation moves from price alone to price compared against something real.
I learned a version of this on the flight line as a KC-10 crew chief. You start with what failure costs, then decide what prevention is worth. Check everything, assume nothing. The aircraft had a mission, and the mission set the standard.
What the session looks like
The Downtime Ledger is a working session of about 60 minutes with one of our engineers. We use your numbers, not industry averages and not ours.
Within two business days you get a four-page report. It shows your hour’s cost, the systems that hour depends on with their owners and recovery times, your top three risks in dollars, and one recommended next step. One, not a shopping list.
You keep the report either way. If we never talk again, you still walk away with a number most owners only guess at, and you can hand it to whoever runs your technology and ask them to plan around it.
That’s where we start with every client, and it’s why the first commitment in our Standard is about your business rather than our services. Your business runs on hours. We protect them. If you’d like to find out what yours are worth, I’m happy to talk.
One standard. Every client. The door is always open.
Book a Downtime Ledger. About 60 minutes. Your numbers. You keep the result. circlesquareconsulting.com/downtime-ledger#book