8 Steps for Successfully Managing a Business Crisis

By Kevin Leyes,
business.com writer
|
Apr 26, 2020
Image Credit: Blue Planet Studio/Getty Images

You never know when a crisis may occur, but all businesses should spend time developing a plan for how to handle one when it does happen.

Every company, at any time, has to face a crisis. Whether large or small, without any distinction, they can be unexpectedly affected by an unexpected situation.

Although this is a permanently latent possibility that many companies should anticipate, there are cases in which it is preferable to postpone planning to face a risk situation. While knowing when a bad time will come, what event will cause a risky situation for the company, or avoiding corporate crises are impossible questions, it is necessary to have immediate responses to these scenarios. The sustainability of the company or business during the process will depend on it. 

For this reason, here are some tips for proper crisis management. Applicable to large, medium, and small corporations, these tips are useful for those who want to start planning actions to apply before a critical scenario of your business or company. 

In general, a crisis can be defined as a difficult or complicated moment that negatively alters the development of a process. The concept can be applied to a person, society, or in the business world. In this case, it is the last aspect that this article deals with. A business crisis does not vary much from the concept in general, because it is a fortuitous event that threatens the stability of an organization or business. 

They can originate internally, from the malfunctioning of the company itself, or from external factors, which are generally more difficult to foresee and control. Whatever the type, business crises can advance rapidly if there is no response in time to control the situation.

How to identify a business crisis

To face a crisis within your company or business, you need to know that it exists. To do so, identifying it is elementary. Only in this way can you devise the steps that will help to counteract it before it is too late. 

But how do you differentiate a problem from a crisis? Not all the problems of a company can be considered a crisis. Although, if not solved in the first phase, the problem can grow and become a potential crisis. Therefore, we will leave three signs that will help you to distinguish a crisis: 

1. Threatens business stability

If the negative situation the company is going through puts its stability at risk, then we are talking about a crisis. The main characteristic of a critical moment within a corporation is that it threatens the balance of the company and therefore the security of all its members.

2. It causes a shock to the company

A characteristic element of crises is that they come as a surprise and cause a shock to the organization. Not expecting such an event is what makes it a threat to the company or business and represents a risk. Therefore, it must be dealt with as immediately as possible.

3. Press to generate new actions 

The crisis may partially disable the operation of the company or business. This positions the managers or owners to generate ideas to cope with the situation. 

Entrepreneurs will look for effective and timely options to keep the business going in the midst of the situation, while planning long-term actions to ensure that it stays going even after the complexity.    

Although these aspects will not help to avoid a crisis, they will be able to directly identify the moment when the company goes through these difficult times. This will be useful to put in place plans that help to face the hard process that this situation represents. 

How to face a business crisis

Today, the world is going through one of the most critical moments in history. The emergence of a powerful virus has forced society to radically transform the habits of life. 

Businesses have not been the exception, big businessmen and entrepreneurs are in a critical time due to the COVID-19 pandemic, also known as coronavirus. If we apply the elements to identify the virus as a business crisis, we can notice that it effectively meets the established parameters.

First, the pandemic has put at risk the stability of millions of businesses worldwide. The measures of isolation and social distancing have represented a turning point for the operation of multiple businesses around the globe. 

Secondly, although the advance of the coronavirus was progressive, its expansion around the world was surprising. In the blink of an eye, the COVID-19 became a pandemic that shocked society, including the business sector. 

Thirdly, the permanence of the virus and the continuous extension of preventive measures in different countries has caused companies to generate new business ideas that allow them to maintain medium profitability. While still complying with the processes dictated to prevent contagion. 

In fact, many companies have developed a large number of strategies that allow them to maintain their operational capacity in the midst of the situation. They rely on innovative resources that can last even after the crisis. 

But how do you overcome a business crisis or a crisis like the coronavirus or any other? Let's see below some effective procedures to do so:

1. Don't think you're immune 

A common mistake, especially in solid companies, is to believe that they cannot be affected by a crisis. Trusting that a critical event on a large scale will not be able to affect them is not recommended. 

Although, security is a key factor in the business field. To downplay the importance of wide-ranging social crises is counterproductive. Taking these situations seriously and setting up actions to manage the company at such a time is the right thing to do. 

2. Have a previous action plan 

This step is indispensable. A large company or a newly started business must have a plan of action that is its lifeline in times of crisis. This action plan should contain activities, tasks to be executed during the situation, and the resources needed to do so. 

It has been mentioned that a crisis is an unpredictable process, so the action plan must be broad and general so that it is possible to analyze the paths to be taken when the time of the contingency arrives. 

It is important to know all the aspects of the company to carry out the action plan. Thus, it will be easier to identify points of greatest risk for the company and determine the impact that a certain event will cause in the corporation or business.

3. Recognize the crisis immediately

In a world where immediacy is becoming increasingly important due to social networks, postponing actions is inappropriate. Allowing time to pass will only lead to the gradual advance of the crisis. 

The most opportune thing is to recognize the existence of the crisis immediately upon learning of it, and to initiate consecutively the necessary actions to manage the situation before the damage caused is prolonged. 

A consistent, punctual, and constant message will provide credibility and presence to the company throughout the crisis.

4. Organizing processes internally 

Organization in times of crisis is one of the most important aspects. Acting in an organized way will allow the flow of work and that each of the members of the company will focus on the function that corresponds to them. 

Delegating functions, establishing levels of responsibility and supervision of actions, will avoid further weakening of the business environment. At the same time, it will be possible to control the variables in which the crisis evolves. 

Assembling a crisis management team is a highly recommended step. To do so, it is necessary to consider different skills of the employees, so that each one will be able to provide different perspectives to manage the crisis.

5. Making long-term proposals 

An appropriate technique is to establish strategies that can be useful during and after the crisis for both the company and society. In this way, changes will not be so abrupt once the critical moment of the situation has passed.

6. Keeping calm and making compromises 

While the priority is to maintain the stability of the company in the midst of the situation, an important part of this is to keep calm within the company. It is important that both employees and the public are kept informed of the situation to avoid increasing uncertainty. 

On the other hand, it is necessary to establish commitments from the company to create an image of empathy and demonstrate the desire to move forward in the midst of the situation. This will undoubtedly generate additional value, as it shows the willingness to continue even in strong moments.

7. Constant evaluation of the process 

Both the crisis and the processes executed in its midst must be constantly evaluated. This will allow us to move forward and generate new ideas or improve existing ones to stay in this difficult time.

Both large companies and smaller businesses must carry out constant monitoring of the context in order to ensure that the actions taken give positive results, incorporate new ideas, or enhance those already in place.

8. Be supportive

According to the magnitude of the situation, being in solidarity is elementary. Looking at people affected by a natural crisis, for example, is a way of showing the feeling of solidarity and cooperation in important moments.  Solidarity will always be a plus. Not only will it show the collaborative image of the company, but it also provides a presence at that critical moment for society.

The criteria mentioned may vary according to the priorities of each company or business. However, the purpose is common: to resist and come out stronger from the crisis. Seeing this process as an opportunity to reinvent itself, correct weaknesses, or start from a new perspective is the best option for nurturing business potential. 

Kevin Leyes is the Chairman of Leyes Enterprises and the Founder and CEO of Leyes Media, an social media marketing and public relations agency, and Team Leyes, an urban jewelry company. He is an Official Member of the Forbes Business Council and Young Entrepreneur Council.
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