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How to Manage Your Small Business Through a Crisis

ByNabeel Ahmad, Last Modified
Jun 23, 2019
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> Business Basics

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 sales, which affects the company’s profit margin and further tarnishes its credibility.

Even the largest and most well-reputed enterprises and corporations are not immune to such a reality. Toyota, a tycoon of the automobile industry, suffered an exorbitant amount of financial damage between 2009 and 2011 following the release of vehicles with sticky accelerators that claimed the lives of many innocent people. The company was slow to react and reluctantly recalled their faulty vehicles, incurring huge losses and permanent damage to their credibility.

Another notable example is the PEPSICO "Syringe Crisis" in 1993. Claims were being made that cans of Diet Pepsi contained syringes that were contaminating the content inside. Unlike Toyota, Pepsi was quick to remedy the situation, arresting the individual at fault and publicly apologizing for their mistake. As such, there was hardly any lingering effect on the Pepsi brand and normal operations resumed in no time.

The two situations highlight the importance of good leadership and a proactive damage control policy. 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.

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.

2. 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.

3. 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.

4. 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.

Nabeel Ahmad
Nabeel Ahmad
See Nabeel Ahmad's Profile
Nabeel Ahmad is a serial entrepreneur who has founded multiple successful businesses in the fields of marketing, software development, PR, e-commerce, and more. He is the founder and CEO of Vertabyte, a full-service digital media agency that partners with top companies, many of which have a revenue that exceeds the billion dollar mark, and helps them achieve all of their business goals. Nabeel has been a strategic advisor to many successful startups and brands, and regularly provides consultancy to them in crafting the best marketing and business strategies. At Vertabyte, his special focus is on leveraging the power of social media to boost businesses exponentially. An award-winning marketing expert, Nabeel has a deep understanding of modern marketing strategies and principles, and knows how to apply them to businesses to help them succeed. His expertise in marketing has allowed him to help a number of businesses increase their revenue by tremendous amounts. Apart from that, due to his PR expertise, he has been able to get many companies and public figures featured on top media publications like Forbes, Huffington Post, Entrepreneur, Inc Magazine, Business Insider, and more. Along with running many successful businesses, Nabeel is also an angel investor. He primarily invests in early-stage startups.
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