The Importance of Modern Password Policies for Small Businesses

For years, businesses were told to force regular password changes — every 90 days, every 6 months, or at least once a year. The idea was simple: change passwords often, stay secure.

But in 2025, that approach is considered outdated and counterproductive. Security fatigue is real, and constant password resets can actually weaken your defences rather than strengthen them.

So, what does a modern, effective password policy look like for small and micro businesses? Let’s break it down.

1. Password Fatigue Is a Real Security Risk

When employees are forced to constantly change passwords, they often respond by taking shortcuts — reusing old passwords, adding a single character, or writing them down, such as in a sticky note or on in their personal phone. This creates predictable patterns and vulnerabilities that attackers can exploit.

Modern guidance from organisations like the Australian Cyber Security Centre (ACSC) and NIST (National Institute of Standards and Technology) now recommends focusing on password quality and protection rather than frequency of change.

In other words: Use strong, unique passwords. Don’t change them just for the sake of it - only when there’s a reason, like a suspected breach or compromised account.

2. Multi-Factor Authentication (MFA) Is Now Non-Negotiable

Even the strongest password isn’t perfect. MFA adds an extra layer - a one-time code, app approval, or physical key - that makes stolen credentials far less useful to attackers.

For small businesses, MFA is one of the simplest and most cost-effective ways to dramatically improve security. It’s especially important for:

• Email and Microsoft 365 / Google Workspace accounts.

• Financial and accounting software.

• Remote access systems or admin panels.

If a password is compromised, MFA stops most attacks in their tracks.

3. Review Password Policies More Than Once a Year

Cyber security is a process, not a yearly checkbox. The threat landscape changes constantly, and password policies should evolve too.

Schedule biannual reviews (or quarterly for higher-risk industries) to check:

• Are passwords stored and shared securely (e.g., via a password manager)?

• Are MFA and access controls properly enforced?

• Have any accounts or apps been left active that no longer need access?

Even small changes like removing old logins or adjusting password length rules can close big gaps.

4. Encourage Smarter Habits, Not Stricter Rules

The best password policies work with people, not against them. Instead of forcing frequent resets or complex requirements like “12 characters with symbols and uppercase,” focus on:

• Allowing passphrases (e.g. “CrimsonParrotRides!”).

• Using password managers to reduce human error.

• Training staff to spot credential phishing and avoid credential reuse.

When policies are simple, logical, and consistent, employees are far more likely to follow them — and that’s what truly improves security.

Final Thoughts

Good password policies aren’t about constant resets — they’re about creating strong, unique, and protected credentials that last. By focusing on password quality, adding MFA, and reviewing processes regularly, small businesses can drastically reduce the risk of compromise without overcomplicating daily operations.

Keep Your Business Protected with Stonewood Cyber

At Stonewood Cyber, we help small and micro businesses build practical, modern security processes - including password policies that make sense. If you’re still using outdated password rules or need help rolling out MFA across your business, we can help simplify and strengthen your setup.

Contact Stonewood Cyber today and find out how to modernise your password security the right way.