The hidden risks of running your business from spreadsheets

For small teams getting started, spreadsheets are often the simplest way to organise key business data. But over time, that simple spreadsheet turns into something it was never intended to be: a spreadsheet as a database.

Around 90% of organisations still use spreadsheets in some parts of their data processes. It becomes the system of record for key business data.

That’s when the risks start to build: version conflicts, data errors, scaling problems, and security gaps that quietly add friction to decision-making and daily operations.

In this article, we’ll look at the hidden risks of running your business database from spreadsheets and what more structured systems can do instead.

Why businesses start with spreadsheets as their first “database”

Most teams turn to spreadsheets because they’re practical. No need to wait on IT. No training sessions. No approvals or extra logins.

For teams building something from scratch, spreadsheets are an obvious first step.

Why does it make sense at the start?

• Anyone can create one (no developer or admin required)

• Fast to test a process, track data, or explore an idea

• Built-in flexibility to fit different workflows

• Already familiar to most people in the business

That ease is the appeal but also the trap. The more your team relies on a spreadsheet, the harder it becomes to transition when your needs outgrow it.

The hidden risks businesses don’t see (until it’s too late)

When businesses rely on spreadsheets to manage critical data, several risks emerge: conflicting data versions, manual entry errors, lack of audit trails, poor scalability, uncontrolled access, and limited integration with other systems.

These issues build slowly, but they can seriously impact decision-making, compliance, and efficiency. Now, let’s break those down.

1. Conflicting versions of core data

Multiple copies of the same spreadsheet lead to version conflicts. You think you’re working from the latest file, but so does everyone else. Without one single source of truth, your team ends up duplicating work or making decisions based on outdated numbers.

This is one of the biggest risks of using a spreadsheet as a database: it creates confusion instead of clarity.

2. Manual data entry and human error

Spreadsheets often rely on someone manually inputting or copying data. That opens the door to typos, formatting inconsistencies, and logic errors hidden in cells or formulas.

Without guardrails, you can’t trust the data, which means you can’t trust the decisions made from it. Good data risk management starts with removing manual friction.

3. No audit trail or accountability

When something goes wrong, you need to know who made which change and when it was made. But traditional spreadsheets saved locally or shared via email don’t give you that level of visibility.

Even cloud-based versions only offer basic version history, which can be slow to navigate and too limited for most day-to-day needs.

If your team is trying to troubleshoot an issue, resolve a dispute, or meet compliance checks, that missing audit trail can quickly turn into a blocker.

4. Performance breaks at scale

Spreadsheets slow down as they grow. More rows, more users, more formulas: eventually, it becomes sluggish, unstable, or outright broken.

Excel, for instance, caps out at just over 1 million rows and 16,000 columns. That might sound like plenty, but many businesses now work with larger datasets as standard. Once you hit those limits, you’re forced to split files, lose history, or create risky workarounds.

5. Security risks and uncontrolled access

A spreadsheet shared via email or cloud storage gives every recipient full access. You can’t control what they see or edit. That’s a security risk, especially when you’re handling personal or financial data.

It’s also worth noting that cybercriminals increasingly see SMEs as easier targets, having valuable data but fewer security resources than larger organisations.

6. No integration with other tools

Spreadsheets usually struggle to integrate with other business systems. As a result, people re-enter data across platforms, wasting time and introducing more risk.

You can’t automate a database if your data lives in disconnected spreadsheets. A connected database helps your team keep data flowing and reduces manual effort.

Why better data management builds a stronger foundation

Many teams start by building a simple business database using modern tools that give them more structure, flexibility, and room to grow.

Here are three that work well for small to mid-sized businesses:

• Airtable lets you organise business data with the simplicity of a spreadsheet, but with added structure, relationships between records, and built-in automation.

• Notion offers flexible databases for a wide range of use cases (from tracking projects to managing a CRM or operations data). You can tailor it to fit your workflows and bring data and documents into one place.

• Zoho Creator is a low-code platform for building more custom business applications. It allows you to manage data, automate workflows, and create reports, all without heavy development work.

Making that shift with a more structured database gives your team clearer workflows, faster decisions, and systems that scale with you.

Here’s what that looks like:

1. One source of truth

When everyone works from the same central source, there are no version conflicts or duplications. That means faster reporting, better collaboration, and more confident decision-making across the board.

It also makes cross-team reporting easier. For example, sales, finance, and operations can all view consistent, up-to-date figures without the endless back-and-forth.

2. Cleaner data you can trust

With rules for required fields, valid formats, and consistent data types, you get cleaner inputs and fewer surprises. The result? More accurate reporting and fewer hours spent fixing preventable errors.

This matters even more when you’re connecting your data to other tools. AI reporting, customer platforms, and advanced analytics depend on clean, structured data.

As analyst Robert Kramer puts it, strong data quality and integration are what turn siloed systems into useful insights that drive better decisions.

3. Clear accountability and audit trail

A modern business database includes detailed audit trails, showing who changed what and when. This supports accountability, transparency, and data risk management, giving your team the tools they need to meet both internal governance and external compliance standards.

4. Scales smoothly as your data grows

Unlike spreadsheets, modern databases are designed to scale. Whether you’re adding more users, handling larger datasets, or looking to automate database workflows, performance stays consistent.

This scalability means your data processes will grow with your business, supporting efficiency rather than becoming a bottleneck.

5. Keeps sensitive data secure

Business databases offer robust security features: role-based access, encryption, and user authentication. This ensures your sensitive data is only available to authorised users, helping your business meet both internal security standards and client expectations.

By moving beyond using spreadsheets for core data management, you can significantly improve your overall data security posture.

6. Connects to your other tools

A modern database connects with other systems to automate database updates and ensure your data flows seamlessly across your digital ecosystem.

This reduces manual effort, improves your data accuracy, and allows your team to spend less time maintaining spreadsheets and more time delivering value.

The longer your team works around spreadsheet limitations, the more time, accuracy, and confidence you lose. A proper database gives you more room to grow. It’s the difference between managing data and actually using it to make better decisions, serve customers faster, and build smarter workflows from the ground up.

If your team’s starting to feel the strain of spreadsheet sprawl, it might be time for something more structured. At Adapt Digital, we help businesses move beyond spreadsheet-based “databases” to fit-for-purpose tools that scale with your needs.

Let’s talk about what your business database could be doing next.