For an entrepreneur rarely is anything more traumatic in your working life than when disaster strikes the business you’ve worked so hard to build up. Disasters can take many different forms: an IT system breakdown; a break-in at work; or an arson attack that ruins your stock. The key to surviving a crisis is to get your business back on its feet again as soon as possible. So, an owner should start thinking about how to ensure their small firm can bounce back from disaster before that disaster strikes. There are a number of logical steps that you should take to ensure you could handle a crisis:
A mistake many small firms often make is to think that a crisis won’t happen to them, or that they don’t have the time to prepare for an event that might never occur. But a crisis might cripple your business if it isn’t prepared for it. Your company might be forced to shut down for a short while, or even forever.
The first step is to consider ways how your firm can continue trading through a crisis, if possible. If you think of what are the worst events that could strike your company, then you can devise ways for handling each of those, long before they may happen. For example, if your office is put out of action, can your staff work from home? If everyone can log onto the company’s IT system remotely then your business could carry on without your clients noticing you have a major problem.
Make a plan
Once a crisis occurs, the next step is to implement a proper plan to help you assess the situation and try to manage it. Whereas most big businesses will already have a crisis management plan in place, which sets out exactly what they should do in an emergency, few small businesses will have one. But, by planning in advance, you can respond quickly and effectively to a crisis, when delays and uncertainty could be costly.
The plan doesn’t have to be very long, but it should cover all the major factors that are crucial to keeping your business running. Once the plan is agreed it shouldn’t be left to gather dust in a filing cabinet; it won’t be effective unless it is reviewed regularly and kept up to date. It also needs to be tried and tested, so you know it will work and every staff member understands what will happen and is clear about the role they will play in dealing with the emergency. Practice makes perfect, and a well-rehearsed plan is more likely to succeed.
Once you’ve been through a crisis, review what worked well and where you need to improve for the next time – because lightning can strike twice.
How do you know when you’re in a crisis? If your office has burnt down then that is obviously a disaster. But other situations are less clear-cut. For example, your two top salesmen quit and go to work for your rival. Not only have you lost senior staff members with intimate knowledge of your strategy, but you may lose several of your biggest clients as well, which will significantly affect your turnover.
It’s important for a boss to keep close to their business from day to day so that they understand which kind of situations could hurt it most and are aware when the firm is encountering a major problem. So when they judge their firm is in a crisis they can act quickly and decisively to limit the damage.
Remember your customers
It’s understandable that you’ll be preoccupied by what’s happening to your own business during a crisis, but don’t forget about your customers. There is a risk that they will go elsewhere if they feel they are not getting their usual good service from you and it may be difficult to get them back again. A sensible precaution is to make a list of your key customers and concentrate on communicating with them in a crisis. Explain clearly to them what the situation is and what you are doing to resolve it – keeping them regularly updated could ensure they remain loyal to you.
Consider Business Interruption Insurance
Business interruption insurance is designed to protect against unforeseen events, such as a fire or a flood, which may result in a loss of income for a company. It can often be added to your office insurance policy, because it’s not just the cost of the physical damage that will hurt your business, but also the amount of income you’ll lose while you’re out of action. Your cashflow may dry up for a time, but you’ll still need to meet loan repayments, supplier’s invoices, employees’ salaries, and of course, you’ll still need to serve your customers.