Can $55 a year be all it costs to give your business piece of mind? Online-backup companies say yes.

Protecting data is paramount to the survival of mom-and-pop shops. Some 70 percent of small businesses that have a major data loss go out of business within a year, according to a report by the UK’s Department of Trade and Industry and PricewaterhouseCoopers. Information technology companies today offer small businesses the ability to securely backup data over the Internet, eliminating the need to rely on clunky tapes -- and potentially saving them hundreds to thousands of dollars. 

Since the dawn of the digital data days, small businesses used tape drives and hard-copy tapes to back up data. An employee would have to remember to run the backup each day and take it offsite to prevent the data from being lost in a calamity like a fire. With online backups, a company pays monthly or yearly for its data to be backed up to a data center via the Internet. The data is then accessible over the Internet, which means it can be accessed from anywhere there’s a Web connection. 

The online option is especially attractive to business owners due to its low costs. The backup process is automated, with some services costing as little as $54.95 a year.

“For small businesses, the affordability sets online backups apart from a lot of other solutions,” said Daniel Royer, business manager of MozyPro, the business online backup service of Seattle-based Decho, a unit of EMC (EMC). “It even resonates more in the economic climate.”

Physicians Endoscopy, a Doylestown, Pa.-based healthcare services company, didn’t switch to an online backup for costs savings alone, but since doing so the company saves 90% on backup costs in its 16 ambulatory centers. Tape drives for each location had cost $3,000 to $5,000, and tape cartridges cost around $100 each, not to mention the labor associated with ensuring the data is backed up, said Gene Goroschko, VP of information systems.

“We were very pleasantly surprised with the experience. We were always waiting for that other shoe to drop,” said Goroschko. Physicians Endoscopy went with a service from Decho and has since moved completely to an online-backup environment.

But, business owners say, cost isn’t the only appeal. The notion of eliminating the room for human error can also be alluring, especially for a small business which needs to stay focused on ... business.

“People often forget to take it [the tape] off site. All the things you're supposed to do when you're a small business you don’t,” said Scott Thompson, chief executive of Venyu, the Baton Rouge, Louisiana online backup company. With online backups you “set and forget,” he said.

For Dick Leslie, a business counselor in the San Diego office of SCORE, a non-profit that counsels small businesses, the automation is what makes online backups worthwhile.

“To me, online is so seamless, painless and inexpensive,” said Leslie, whose firm uses Carbonite for its online backup and annually pays $54.95 per computer. “Because it’s automated it gets done. If you do this manually you have to discipline yourself to back up the data at the end of the day,” said Leslie.

Backing up data via the Internet may set off security alarm bells for many small businesses, but experts say security breaches are a non-issue. The data is encrypted as it’s sent over the Internet and while stored in the data center. With some services only the customer knows the password, which means if the customer forgets the data won’t be accessible to anyone.

“With almost all of the solutions the data is encrypted in transit,” said Bob Gaines, senior systems manager at All Covered, an IT services company for small businesses. Gaines said he hasn’t come across any online service where the data has been comprised.

While there are clear benefits of backing up data online, it may not be for every small business.

Gaines said small businesses that often need immediate access to stored data may be better off with tapes. The transfer rate is only as good as the Internet connection. He recommends companies engage in a hybrid model, in which they incorporate local data backups to quickly access data and remote backups to protect against a fire or theft.

Since there are a slew of companies offering to backup data, Gaines suggests you do your homework and not go with a provider simply because it’s the cheapest. After all, protecting data is the No. 1 goal, and you want to go with a provider that will be around for the long haul.

Online backup is a “big buzz word,” said Gaines.

“There’s a lot of demand because people want to have that promise of hassle free backups ... but when you delve down into how a business operates it doesn’t always mix well,” he said.