Are Virtual Data Rooms Worth The Hype? 6 Reasons Why They Are
As businesses become more and more digitized, the need to store data safely becomes a key concern. You also need a way to organize, access, and disseminate this information if you are to benefit from it.
This is where virtual data rooms come in.
If you are not yet sold on the idea, here are six reasons why virtual data rooms are a staple for forward-thinking businesses.
1. Preservation of Documents
While you might only have a few paper documents and files as you start, these will compound as your business grows. Paper tends to deteriorate rather quickly, meaning you might slowly lose the contents therein.
Tracking down paper files is also inefficient.
VDRs eliminate the hassles associated with paper documentation. As long as you scan all your documents and create backups, there is virtually no possibility of you ever losing your information.
2. Data Security
There were 540 data breaches in the first half of 2020 alone. These are only the reported ones.
VDR is one way to prevent a data breach.
When you invest in a data room, you are paying to safeguard your confidential information. For one, you get customizable user permissions, meaning any documents you share can only be accessed by the rightful recipients.
Several security levels are in place, including data encryption, restricted view of data room, malicious software detection systems, and complex authorizations. Data room vendor Firmex also uses watermarking or disables downloading and printing options on certain documents to minimize leaks.
3. Saves Money
Any businessman can attest to how important it is to preserve available business cash. Minimizing overheads is one way to do this.
With a virtual data room, you can avoid the costs that accompany the physical handling of files. Think filing and records clerks, printing, stapling, powering office machines, file folders, copying, editing, and so on. The cost savings realized in this way can be channeled towards business development.
4. Investor Accountability
Data rooms provide an avenue for businesses to display important information.
Investors shun risk. The goal in any scenario is to get into profitable partnerships where they are assured of making a return. Having a platform to display investor-centric information showcases you as a business that is organized, trustworthy, and on top of things.
This creates room to strengthen investor relationships, which are invaluable to any business.
5. Ease of Access
In business, the time it takes to get things done can significantly impact productivity. You need all involved to be able to access certain information quickly to support quick decision making.
Data rooms make it possible for staff to access project files from anywhere in the world. For businesses with investors and employees in different parts of the world, geographical distance ceases to become a barrier to business processes.
6. Compliance and Due Diligence
VDR facilitates due diligence for business to meet legal requirements when buying or selling items. One way it does this is by detailing edits, deletions, and amendments made to documents.
This, in a way, creates a digital log that can be used as proof of legal compliance.
Legal compliance helps businesses avoid hefty fines, business stoppage, and closure. It also positions you as a conscious, socially responsible business, which enhances your brand image. Customers and investors also prefer to align with entrepreneurs with above-board business dealings and practices.
Don’t Be Afraid to Try
Essentially virtual data rooms deliver more than just storage space for your data. You get security, quick access, enhanced investor relations, and better support for business processes. However, data rooms are not created equal. Take the time to assess your business needs before identifying a provider. You need a partner who can adequately support your business and scale when you need to.