Sooner or later, every business will face a crisis. While entrepreneurs are fully aware crises are inevitable, many fail to adequately prepare for a worst-case scenario. When a crisis strikes, these entrepreneurs are the first to be caught off guard.
But most owners of small companies are truly committed to their businesses. They do their best to deliver value and to prepare for what lies ahead. It’s no wonder that, in most cases, these companies manage to survive and grow in the of crisis.
Imagine your company is hit with a crisis. How are you going to get it back on track? Do you have a plan to get operations off the ground? Do you have a post-crisis recovery strategy that will improve your business in the long run?
If you struggle to answer the questions above, this short guide is for you. It explains how to prepare your company in the event of an emergency in five simple steps.
Let’s dive into the fundamentals.
Stay in the right frame of mind
Surviving a crisis is never a bad thing. But before you start celebrating, it’s important to critically examine what went wrong.
- You have no idea why your company survived while others failed (or did better than you)
- The problem that got you into the crisis in the first place isn’t resolved
Avoid negative, fatalistic thinking. Instead, approach the situation like this: “Life gave me another chance. I should do my best to not blow it. I will solve every potential problem to secure my business against future crises.”
Everyone makes mistakes. But what separates successful individuals from those who fail is the individual's willingness to address their mistakes and work on doing better.
What should you expect to do, then? Be ready to work really hard!
Analyze your business
First, figure out why a crisis hit your business.
While some reasons might be obvious (i.e., global or local economic issues), some causes are harder to pinpoint. You should look behind the proverbial curtain and study your company from A to Z. Prioritize your attention to weak points such as:
- Business processes
- Employee performance
- Revenues and expenses
When reviewing these areas (especially in the first two points), you may uncover several surprising things that led to your company’s crisis.
Remember, some businesses lag behind because they start off on the wrong foot — they might lack a viable strategy, competitive product(s), adequate funding and so on. Thus, it’s important to view your business through a critical, yet realistic lens. If you cannot compete in your niche market, you likely have a serious problem within your company. Act quickly to resolve these issues before new problems arise.
Analyze your competitors
After carefully reviewing your own company, it’s time to closely examine your competitors.
Have your competitors ever suffered a crisis?? Did they fail completely or manage to stay afloat? How did they survive? Did they succeed in growing their companies during the crisis despite the odds?
Make a list of every competitor and place them into four categories:
- Failed completely
- Scraped through a crisis
- Were hit but managed to grow
- Weren’t touched by any crisis
Take your time analyzing each company on the list. Specifically, focus on the health of each company in scenarios three and four, and compare how your company did in similar situations.
Here’s why you should examine all four categories in depth.
Companies that failed completely
Analyze these companies to identify what they did wrong to avoid similar mistakes in the future.
These businesses can also give you a hint of what lies ahead for your business. Pay close attention to these companies, as they offer a closer look at the particular niche you’re working in.
Some crises are niche specific. Entire industries are slowly dying, and it makes sense to test your niche for vitality. If others failed and you are the sole survivor, you may want to reconsider your target niche.
Exit the niche if its time is over. For example, consider how Uber and Lyft disrupted a lucrative taxi industry. You don’t want to end up investing in a black hole company (like the taxi industry) if it has no future.
Companies that scraped through a crisis
Ideally, your business belongs in this category. You managed to survive but had to put every shoulder to the wheel to see it through. So, why study other companies with a proved record too? Look at their strong points. What helped them stay afloat?
Don’t hesitate to adjust your own company to implement the successful and cost-efficient business processes of competing companies. But tread carefully: Don’t just "copy and paste." Adopt and adapt their strategies to specifically fit your own business.
Companies that were hit hard but managed to grow
Your job here is to answer one single question: How did they grow while others lagged behind?
This one isn’t easy to answer, but make sure you are able to answer this question. Read articles published by companies that survived and books about business management, research competitors through your own channels and attend networking events. Talk with professionals who have faced – and come back from – crises. Unveil their secrets and see how you can apply their business tactics to your own company.
Companies that went through the crisis untouched
These companies are your role models. If you succeed in learning what they did right, you will undoubtedly reshape your own business in positive ways.
The most common reasons for success are:
- Impeccable business processes
- Professional, efficient management and staff
- Advanced offline and online marketing
- Appealing brand identity
- Extensive budget planning
Most companies are far from perfect, but every company shows potential for growth. Learn from other companies and study how they found success to help guide you as you cement your position in the marketplace. With a strong foundation to build on, your company will also find sustainable growth for the long term.
Implement what you have learned
Knowing your company’s ups and downs is just a portion of recovering well following a business crisis. Conduct a realistic assessment of your company and understand your business won't survive the next crisis if you fail to do your homework right now.
These five simple steps can help strengthen your business against future unknowns:
- Cut negative processes
- Make a list of positive processes
- Improve beneficial processes and instill your competitor’s best practices
- Test the results
Investing in employees is also crucial. Spend time thinking about the role of every member on your team and get to know them personally. Learn who brings the most value to your business — retrain or remove those who may not be a good fit for your company.
The end goal here is to implement the Pareto Principle. To ensure your company thrives in the long run, you must be able to retain your best talent and build on your most powerful processes.
Adopt a laser-focused approach to marketing
Your marketing strategy should be optimized and updated for any new processes you implement. Post-crisis marketing is an intriguing topic that can be leveraged to increase your company’s visibility.
Discover what helped you recovery quickly and what hampered your recovery. For example, if you attracted most of your customers through social networks, continue with your social media strategy. On the other hand, if you invested heavily in paid ads with no return, consider eliminating this investment.
In most cases, you will have to concentrate all your efforts on one specific niche, product or service. What works best for you? Figure out your greatest strengths to solidify your company’s position in your niche market.
Learn to focus and lock onto your target. Get rid of everything that hinders your business. It may be painful, but you might not have any other choice.
Image from Dusit/Shutterstock
According to Wikipedia, a crisis is any event that leads to a dangerous situation. However, every crisis leads to changes, and every change is an opportunity. Crises test small businesses. Use a crisis as an opportunity to evaluate your company.With this five-step guide, you can quickly bounce back after a crisis and position your business for greather success.