Cloud vs Local Backup: SMB Advantages & Disadvantages

In today’s digital age, data is everything. Even for small and medium-sized businesses (SMBs). Data enables digitally transformed SMBs to drive growth, increase productivity, and maintain a competitive edge. However, all the data you collect also necessitates a strong strategy to protect it. But how do you choose between cloud vs local backups for your organization?  

Each of these two approaches has specific advantages and disadvantages. In this article, we explore each solution to help your SMB choose the best backup approach for your business. 

Finding the Right Data Backup Strategy for SMBs

To find the right data backup strategy, it’s important to clarify your data backup objectives by asking the following questions:  

Enter The 3-2-1 Backup Strategy

Many experts believe that the 3-2-1 backup strategy provide ideal answers to the questions above. According to the strategy, SMBs should always have: 

Three copies of data

This means having one primary copy and two backup copies, and it ensures that there are still two copies available for recovery even if one copy is lost or corrupted. 

On two storage devices

To provide redundancy in case of hardware failure or corruption, it’s recommended to keep the two backup copies on different storage devices, such as external hard drives and optical disks.  

With One Copy Kept Off-site

Having one copy kept off-site provides protection against local disasters like fires, floods, or theft. This ensures that SMBs’ critical data is always recoverable, even if their primary location is affected by a disaster. 

In practice, the 3-2-1 backup strategy can be implemented using both local and cloud backups. However, that doesn’t mean the two approaches are equally suitable for all SMBs.  

Let’s take a closer look at each. 

What Are Local Backups?

Local backups store copies of data on physical storage devices. These may be on premises or in various physical locations. Examples of storage devices on which local backups are commonly stored include: 

  • External hard drives 
  • Network-attached storage (NAS) 
  • Tape backup systems  

You can create local backups using a variety of backup software tools, such as:  

In practice, local backups can be used to implement the 3-2-1 backup strategy by backing up all workstations on a central NAS device and tape backups or USB flash drives.  

Then, the tape backups or USB flash drives can be regularly moved to a secure off-site location. That way, one copy of data is always protected against local disasters. 

5 Advantages of Local Backups

Local backups offer several advantages, including: 

1. Fast Data Recovery

Because local backups are stored on-site, they can be quickly accessed in case of data loss. The actual speed of data recovery then depends on the storage device itself, with hard drives being considerably faster than tape backup systems.  

2. Greater Control Over Data Security

With local backups, you have greater control over the security of your data. That’s because it remains within your physical premises and is never handled by any third party. 

3. Lower Long-term Costs

While requiring some initial and ongoing investment, local backups can cost you less money in the long run. That’s because the cost isn’t based on how much data is transferred but by the amount and type of backup space available. 

4. Easier Compliance with Data Regulations

Depending on the industry, you may be required to keep backups of your data on-premises to comply with data regulations. If so, local backups may be your only choice.  

5. No Internet Connection Required

Local backups don’t require an internet connection to be created or restored. This can be advantageous for your organization if you reside in areas with poor internet connectivity and slower data transfer speeds. 

5 Disadvantages of Local Backups

However, local backups also have some disadvantages, including: 

1. Limited Capacity

With local backups, the total storage capacity is always equal to the sum of the storage capacity of all purchased backup devices. This means that you may not always be able to create extra backups in addition to their regular backup rotation.  

2. Limited Accessibility

The accessibility of local backups suffers greatly when some employees work remotely and backup their work data on USB flash drives. Local backups also present a challenge if your SMB has multiple locations; since it can be difficult to ensure that each location has access to the backup data it needs.  

3. Potential for Theft

Backup storage devices that are not kept in secure locations are vulnerable to theft. A random thief could steal a hard drive full of sensitive business data, or an employee could misplace a backup device in a public place. Both incidents could result not only in the loss of critical data but also in a costly data breach.  

4. Vulnerability to Disasters

Local backups stored on-premises are vulnerable to natural disasters like floods, fires, or theft. In such cases, you may lose your original data and primary backups simultaneously. This leaves your potentially outdated off-site backups as the only available option for recovery.  

5. Manual Processes Required

It’s impossible for you to completely automate local backups because someone always needs to: 

  • Install new backup devices  
  • Configure backup settings 
  • Physically move backup storage devices off-site  

And whenever something needs to be done manually, errors can occur.  

What Are Cloud Backups?

With cloud backups, backup copies of data are stored on remote servers that are owned and managed by third-party cloud providers. Examples of these cloud providers include: 

These providers charge for their backup services based on a pay-for-what-you-use basis. This means you only pay for the backup storage capacity you need. 

Because cloud backups are always kept off-site (and optionally replicated multiple times across different geographical locations) they make it easy for SMBs to implement the 3-2-1 backup strategy in practice.  


Microsoft’s Azure Backup service by default replicates data to a secondary region located hundreds of miles away from the primary region.  

5 Advantages of Cloud Backups

Here are some of the main advantages of cloud backups: 

1. Unlimited Scalability

Cloud backups can scale up or down easily depending on the amount of data to be backed up. So, you don’t need to invest in expensive hardware to increase your total backup capacity. 

2. Cost-effectiveness

Because cloud backups can easily scale up or down and are typically charged on a pay-as-you-go basis, you only pay for the storage you really need. This can make cloud backups more cost-effective than local backups, but only when cloud backups are used efficiently.  

3. Remote Work Friendly

Cloud backups can be accessed from anywhere with an internet connection. This makes it easy for remote workers to access their backup data and for you to avoid data loss regardless of where your employees are located.  

4. Disaster Recovery

If you keep your backups in the cloud, you can recover lost data even in the event of a local natural disaster. That’s because cloud backups are stored off-site. Often, this off-site storage is spread across multiple data centers in different geographic locations. 

5. Backup Automation

It’s the responsibility of the cloud backup service provider to manage the physical backup infrastructure. So, you can set up your backups to run automatically and avoid the error-prone manual processes associated with local backups.  

5 Disadvantages of Cloud Backups

Cloud backups are not without some disadvantages: 

1. Reliance on Internet Connection

Since cloud backups require a working internet connection, they can be vulnerable to network outages or other connectivity issues. This can cause backups to fail or be delayed. 

2. Long-term Costs

Cloud backups can be expensive in the long run because their cost depends on the amount of data transferred or stored. This is especially true if your SMB has large amounts of data to back up or those that require frequent backups.  

3. Data Security

With cloud backups, you are entrusting your data to a third-party provider. This leads to concerns about the security of data, especially in cases of data breaches or unauthorized access. However, this disadvantage can be largely mitigated by choosing a reputable cloud provider that secures data both in transit and at rest.  

4. Regulatory Compliance

SMBs in certainly highly regulated industries, like healthcare and finance, are often required to store backup data within a specific geographic location or with specific security measures in place. If you’re in a regulated industry, you need to ensure that your chosen cloud backup providers can meet your compliance needs. 

5. Limited Control

Cloud backups give you limited control over your backup data. They may not be able to customize backup settings or schedules to your exact needs, and you may not be able to access your data in the same way as you could with a local backup. 

Which Backup Approach Should SMBs Choose?

Given the above-described advantages and disadvantages of local and cloud backups, it’s clear that cloud backups are the better choice for most SMBs. The advantages they offer are compelling. On the flip side, the disadvantages are usually easy to overlook or overcome.  

The only exception are SMBs with specific data security or compliance requirements that prevent them from backing up all data to the cloud. For them, combining both local and cloud backups to keep the most sensitive data locally and the rest in the cloud is a viable option. This is known as a hybrid backup approach, and it can combine the advantages of both backup approaches.  

Need Cloud IT Services?

Unsure which backup approach is right for your SMB? Looking for a reliable cloud computing managed service provider who can help you implement the approaches described in this article?

Teal’s cloud solution may be right for you.

Teal offers responsive and secure managed IT services to SMBs nationally, with local headquarters based in:

If you’re interested in learning about our premier cloud solution, contact a Teal business technology advisor today.

Latest Teal News

Subscribe to Our Newsletter

Join Teal Exclusive now to be notified of the latest news, tech tips, and more.

Recent Articles
Don’t Stop Here

More To Explore

Remote Work

Solving Common Remote Work Security Challenges

Organizations face increasing threats from phishing scams, the use of insecure passwords, and the complexity of managing personal devices. Tackling these issues head-on is essential