Managing a Business Crisis

Minimize damage to your business by planning for the unexpected

By Holly Ocasio Rizzo, Writer and editor, Holly Ocasio Rizzo

Crises and disasters can interrupt your business, put employees and others in danger, and cost your company money. Worse, experts estimate that 40 percent of businesses that don't have a crisis management plan go out of business after a major loss.

The best way to handle financial, public-relations, strategic and natural threats is to follow the Boy Scout motto: Be prepared. Create an effective response-and-recovery plan before crises happen. Here's what you'll need:

Take every step to prevent a disaster, including training, safety checks and drills.
Create a crisis-response plan. Appoint a team of employees that knows what to do in an emergency. Let the team develop a recovery plan and keep it up to date.
Get involved with the people who can help you in a disaster, asking not only who could help but also offering your facilities if needed. Review your emergency plans with safety officials, and get together with neighboring businesses to discuss how you could help each other in a crisis.

Know your risks

The first step in creating a crisis management plan is clarifying which risks your company faces. Then you can plan accordingly.
Try: The Hartford Financial Services Group Inc. offers a Web seminar, "Surviving Beyond Disaster," to help companies assess risks and create a 10-step plan. Visit the Small Business Administration site for an overview of what to include in a crisis management plan.

Include technology in your plan

Use your Web site to tell customers how the company is responding. Voice mail can offer alternative ways of contacting the person handling media requests – e-mail, cell phone or pager. Email and cell-phone "trees" can get the word to employees.
Try: Use Yahoo! Groups to set up an off-site closed discussion for your employees, where you can answer their questions and give them updates, and they can share concerns.

Protect your data

Consider keeping paper-based vital records off-site or where they're easily accessible, or know where they'll be taken if they must be relocated. Back up digital data at least once a week, and store it in Underwriters Laboratories-listed records containers or remotely.
Try: Iron Mountain Digital is one of many companies offering remote backup protection for PCs and servers.

See what's coming

Many companies use information from clipping services to help track problems and changes in the business environment. Traditionally, such services watched only print and broadcast media, but many now also search for information on the Web.
Try: BurrellesLuce, more than a century old, offers wide coverage of media and analyses aimed at keeping customers on top of industry trends.

Hire an expert planner

A complex business may pose more intricacies than a crisis-management team alone can foresee. If that's the case, who you gonna call? A crisis management company.
Try: Check this beginner's guide to hiring a crisis management company plus a directory of companies.

Line up back-up vendors and shippers in case your usual ones face their own crises. Place orders occasionally to your back-ups so you're regarded as an active customer when you need them.
Diversify your product lines, locations and customers so market changes and competition won't hurt your customer base.
Review your insurance coverage annually. Consider buying business interruption insurance that helps with operating needs during shutdowns.