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Managing Business in a Crisis Situation

With the increasing spread and rising confirmed cases of COVID-19, businesses are coping with lost revenue and disrupted supply chains as factory shutdowns, logistics halted and quarantine measures spread across the globe, restricting movement and business activity.

Before a crisis strikes, business owners should think about how a disaster would impact employees, customers, suppliers, the general public and their company’s value.

A crisis can strike any company anytime, anywhere. Advanced planning is the key to survival. As the world grapples with the corona virus, the economic impact is mounting

Regardless of how well managed your business is, one crisis could grind things to a crippling halt. This is especially true for small businesses, inadequate resources often render them incapable of sufficiently dealing with the ramifications of a crisis situation. This results in customer backlash and reduced/slow sales, which affects the company’s profit margin and further tarnishes its credibility.

Small business owners have to be especially wary of this as most are deluded into thinking that their small firm is not susceptible to a crisis because of its small scale. Having no clear cut plan, and leadership that is reluctant to take responsibility can be severely detrimental to a firm.

Daily headlines are filled with companies dealing with crisis. Is your company prepared? Just as BP learned with the gulf oil spill and Malaysian Airlines learned through two disasters, a crisis can strike at any time. However, unlike Fortune 500 firms, smaller companies are often unprepared and usually do not have a crisis plan in place. They believe it will never happen to them. But, what if it does?

How well would your company fare if you died in an auto accident on the way to work? Who would assume your role and continue operations? Suppose you own a retail company and you discover that one of your primary products or services has created a major health issue–what would you do? If you operate a construction company and an industrial accident has killed several key members of your team–how would you react?

Before a crisis strikes, business owners should think about how a disaster would impact employees, customers, suppliers, the general public and their company’s value. A crisis can strike any company anytime, anywhere.

Advanced planning is the key to survival in business. Here are seven critical steps to crisis management that every company should have in place regardless of its size.

1. Have a plan

Every plan begins with clear objectives. The objectives during any crisis are to protect any individual (employee or public) who may be endangered by the crisis, ensure the key audiences are kept informed, and the organization survives. This written plan should include specific actions that will be taken in the event of a crisis.
2.Identify a spokesperson-

If the crisis could potentially impact the health or well-being of customers, the general public or employees, it may attract media attention. To ensure your company speaks with one voice and delivers a clear consistent message, a spokesperson must be identified as well as prepared to answer media questions and participate in interviews.
3.Be honest and open
Nothing generates more negative media coverage than a lack of honesty and transparency. Therefore, being as open and transparent as possible can help stop rumors and defuse a potential media frenzy. This transparency must be projected through all communications channels: news interviews, social media, internal announcements, etc.
4.Keep employees informed
Maintaining an informed workforce helps ensure that business continues to flow as smoothly as possible. It also minimizes the internal rumor mill that may lead to employees posting false reports on social media.
5.Communicate with customers and suppliers
You do not want customers and suppliers to learn about your crisis through the media. Information on any crisis pertaining to your organization should come from you first. Part of the crisis communications plan must include customers and suppliers and how they will be regularly updated during the event.

6.Update early and often

It is better to over-communicate than to allow rumors to fill the void for your business. Issue summary statements, updated action plans and new developments as early and as often as possible. Remember that with today’s social media and cable news outlets, we live in a time of the 24/7 news cycle. Your crisis plan must do the same.

7.Don’t forget social media

The Ebola crisis and other recent major news events have all confirmed that social media is one of the most important channels of communications. Be sure to establish a social media team to monitor, post and react to social media activity throughout the crisis.

In conclusion, A crisis that is not managed well can wipe out decades of hard work and company value in a matter of hours. A well-managed crisis confirms that your company has the processes and procedures in place to address almost any issue that may develop.
Another critical component of crisis management planning is the establishment of a succession plan. You should clearly outline the necessary steps to follow if you suddenly become unable to perform your duties.

A crisis that is not managed well can wipe out decades of hard work and company value in a matter of hours. A well-managed crisis confirms that your company has the processes and procedures in place to address almost any issue that may develop.
Another critical component of crisis management planning is the establishment of a succession plan. You should clearly outline the necessary steps to follow if you suddenly become unable to perform your duties.

This plan may include selling the company, or transferring ownership to family members or key employees.

What is most important is that you create the crisis management plan when everything is running smoothly and everyone involved can think clearly. By planning in advance, all parties will have time to seriously think about the ideal ways to manage different types of crises.

As you develop your crisis management plan, seek advice from the experts that include your leadership team, employees, customers, communications experts, investment bankers, exit planners, lawyers and financial managers. Each of these individuals can provide you valuable insight that could be critical should a crisis strike your company.

Although the aforementioned examples occurred in large organizations, there are several valuable lessons which small business owners can learn from:

If your small business ends up in the middle of a crisis, here are four ways to successfully overcome it:

  1. Assess the situation objectively.

In times of peril, you should remind yourself to never let your emotions get the best of you regardless of the size of your business. Instead, you should make an active effort to remain calm, collected and composed. This will enable you to objectively analyze the situation, allowing you to ascertain the root cause of your predicament, and come to a sound conclusion. Recognizing and defining the problem means you are already halfway there to solving it. Furthermore, as a CEO, remaining composed will reassure your employees and inspire confidence within them.

If you are in an emotional place when things go south, it will be difficult for you to consider all aspects and perspectives of the situation. This will result in you forming a judgment based on a select few opinions, which appease you at the time due to your mental state. This can prove to be catastrophic for the whole firm, deteriorating the situation even further. Therefore, it is imperative that you maintain your composure during this challenging period, and make a calculated decision to improve matters.

  1. Maintain an honest media profile.

In 1989, an Exxon operated oil tanker struck off the coast of Alaska and dumped millions of gallons of crude oil in the sea. In addition to receiving bad press, the situation further deteriorated for Exxon when the company refused to acknowledge their fault and were slow to publicly address the situation. This unwillingness to cooperate combined with a slow channel of communications damaged the company’s reputation, leading it to be labeled as an environmentally, unfriendly enterprise.

This example highlights the importance of maintaining a strong and positive communication channel with the media and public. Many large companies feel as if they have evolved out of the need to validate customer objections and reservations. The same goes for small businesses which disregard the need for accountability altogether, claiming that an organization of this size hardly has any lingering effect. However, they are gravely mistaken.

Therefore, after acknowledging the problem, it is your obligation to brief the public honestly, sympathize with the aggrieved parties and request for their unwavering support. Maintaining honesty is key here, as concealing even the most minor of factual evidence could play out to be severely catastrophic. It can be unearthed by the media later on, worsening the situation and reducing customer and investor trust and confidence to the lowest ebb. Furthermore, you should debrief the public in a lucid manner, avoiding the use of any jargon which confuses them and increases uncertainty. Hence, it is imperative that you make public the whole dynamic of the situation or at least the aspects which concern the customers in question.

  1. Outline a crisis management plan.

After you have effectively placated internal and external stakeholders, it is time to direct your efforts internally. The first step is to assemble a qualified team of individuals from various departments pertinent to the situation, such as finance, legal services, human resources, etc.

Next, dialogue should be held to scrutinize the problem and specify the underlying causes. This healthy discourse will voice dissenting opinions, which are crucial to forming an all-inclusive plan of action. The last step to rectify the situation is to formulate a crisis management plan which is inextricably entrenched in the company’s philosophy and ideology. This ensures that the proposed remedy does not diverge from the company’s vision and affects further production. The final draft should be as thorough as possible and must be specifically tailor-made to address the situation at hand.

  1. Adapt, improvise and overcome.

The final thing left is to evaluate the feasibility of the crisis management plan for your small business. Prior to implementing it, you should lay out some basic targets and yardsticks to measure the progress. If the desired outcomes have not yet been achieved in the given time, it is time to make adjustments to the strategy.

Flexibility is key to addressing the situation comprehensively. As such, you should be prepared to adapt and improvise when things are not going to plan.

These four strategies are a simple, yet effective guide to navigating your small business through a crisis of any sort. If implemented properly and adhered to religiously, this plan of action will remedy any situation, and stabilize the firm altogether.

 

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