VPN Basics -Part 1: How They Work, Why You Need One, and Where They Fall Short

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If your team ever works outside the office — at home, in cafés, or on the move — they’re likely connecting through unsecured networks. That leaves your business open to serious risks. Learning the VPN basics is a critical first step in reducing that exposure.

A Virtual Private Network helps create a private, encrypted connection over the public internet, giving your team safer access to internal systems wherever they are.

But while understanding the VPN basics is important, it’s just the beginning. In this guide, we’ll walk through what a VPN is, how it works, when to use one, and where its protection starts to fall short. (More on that — and what to do next — in part two of the guide)

What is a VPN?

A Virtual Private Network (VPN) is a tool that encrypts your internet connection and hides your traffic from anyone who might be watching — including hackers, internet service providers, and even public Wi-Fi snoopers.

Instead of connecting directly to the internet, your device connects to a secure VPN server, which acts as a middle layer between you and the online services you’re accessing. This protects sensitive data, masks your IP address, and provides a safer way for employees to access company systems outside the office.

How does a VPN work?

Here’s what happens behind the scenes when someone connects to a VPN:

1. The user opens a VPN app and connects to a VPN server.
2. The device and server perform a secure handshake, establishing an encrypted tunnel.
3. All outgoing data from the device is encrypted before leaving, and sent through this tunnel.
4. The VPN server decrypts the data and forwards it to the intended website or service.
5. Incoming responses follow the same path in reverse — encrypted on the way back.

This process keeps your data hidden from prying eyes, even on unsecured networks. It also changes your visible IP address, making it appear as if you’re connecting from the VPN server’s location instead of your actual one.

For businesses, this means employees can safely use internal tools, access shared drives, or log into admin panels — even when working from public places — without putting sensitive information at risk.

Key benefits of using a VPN for businesses

For businesses, a VPN isn’t just a nice-to-have — it’s an essential layer of protection, especially as teams work across offices, homes, and public spaces.

Here’s what a VPN helps you achieve:

• Secure remote access: Employees can safely access company files, applications, and systems from anywhere without exposing sensitive information.
• Data protection on public networks: VPNs encrypt data even on unsecured Wi-Fi, protecting your business from opportunistic hackers.
• Improved privacy and anonymity: By masking IP addresses, VPNs make it more difficult for third parties to track user activity or pinpoint a user’s business location.
• Support for regulatory compliance: Many data protection regulations (like GDPR) require businesses to take steps to secure customer and employee data — a VPN helps meet part of those obligations.
• Reduced risk of man-in-the-middle attacks: Encryption makes it much harder for attackers to intercept communications or inject malicious code.

While VPNs offer solid protection in these areas, it’s important to remember they don’t cover everything. (More on where VPNs fall short — and how to build a smarter security strategy — in part two of this guide.)

Common limitations of VPNs you should know

While VPNs are a strong starting point, they aren’t a complete security solution — and it’s important to understand where they have gaps.

Some common limitations include:

• No protection against phishing attacks: VPNs secure your connection, but they can’t stop employees from clicking on malicious links.
• Potential performance slowdowns: Encrypting and routing data through a VPN server can sometimes cause slower internet speeds.
• Limited control over user behavior: A VPN hides your traffic, but it doesn’t monitor what users do once connected.
• Credential risks: If VPN login details are stolen, attackers can still gain access to your network.
• Not built for modern cloud applications: Traditional VPNs struggle with SaaS platforms and large-scale remote teams.

Why a VPN is just the start of smarter business security

A VPN is one of the simplest, most effective ways to protect your business data — especially as remote and hybrid work have become the norm. By encrypting traffic and shielding company systems from public exposure, it provides businesses with a critical layer of security without significant complexity.

But a VPN is just one piece of the puzzle. 

It helps reduce risks, not eliminate them. Understanding where VPNs fit (and where they don’t) is key to building a stronger, more resilient security strategy.

Click here to Read Part 2

In part two of our guide, we’ll take a closer look at the real-world limitations of VPNs — and what smarter, growing businesses are doing to stay ahead.

Need advice on choosing the right security tools for your business? Our team is here to help — get in touch to start building a safer, smarter network.