Lesson 9: Crisis Management

What You’ll Learn: A disaster isn’t a matter of if but when, and being prepared for one – from employee theft to “the big one” – will protect your business and livelihood. We’ll take you through the simple steps you can take to ensure that your business will survive just about anything thrown at you.

Crisis Management (continued)

Essential Tools

As noted earlier, a crisis plan doesn’t have to be as thick as the Seattle Yellow Pages (remember those?). The length and amount of detail will vary greatly by business. That said, the larger a business becomes, the more complex its crisis plan will become. A crisis plan is not something you “set and forget.” It is meant to be updated regularly to reflect changes in your operations.

A solid crisis plan should:

  • Identify every potential crisis that could affect you, no matter how remote it may seem.
  • Determine what you can do to minimize the risk of it happening in the first place, or if it happens, how you can minimize its impact on your business.
  • Create a business continuity plan you can follow in times of crisis to guide you through the four stages.
  • Test the plan annually and make changes based on your drills, remember to keep the response flexible since no two crises, even if they are similar, are the same.

Assessing the Threat

Let’s return to our fire extinguisher analogy. If a fire is a potential crisis for your business, you can take several proactive steps to prevent it from occurring in the first place. In a restaurant, you can clean the grease traps, install smoke detectors, train staff on how to fight a fire and update the sprinkler system. If a fire does occur, then you have a fire extinguisher nearby and your staff is trained in its use, you have the fire department on speed dial and your insurance policy has is up to date and can cover any losses.

Here are just a few events that can interrupt your operations or jeopardize your business:

Natural Disasters – We’ll start with the easy one, including earthquakes, landslides and wildfires. But there are also secondary disasters within each of these, such as a partial collapse of a roof caused by a heavy rainstorm or a broken water main.

Theft or Vandalism – The theft could be in the form of physical loss, such as inventory or cash or the theft of data or intellectual property.

Fire – The causes could be arson or a tool or appliance left on, but it can also be arson or a powerline knocked down in a heavy windstorm that arcs and starts a fire.

Technology – This can include computer viruses, hacking, randomware, system failures, or the fact that your 10-year-old computer’s hard drive seized up and you don’t have a backup. According to the U.S. Bureau of Labor Statistics, 93% of businesses that suffer a significant loss of data go out of business within five years.

Loss or Illness of Key Staff – The temporary or permanent loss of the owner or a key manager can be a disaster for a small business. Perhaps just as important – as we have seen in the pandemic – a lengthy hospital stay because of illness can seriously affect a business’ operations.

Terrorism – Domestic or foreign terrorism is a possibility, even in a small town. We all remember the Oklahoma City bombing and 9/11, but even rural communities can be affected by an act of terrorism, especially by domestic organizations. Even if you’re not the target of a terrorist act, lack of access to your facility or collateral damage can seriously affect your operations.

Supplier or Customer Crisis – Many businesses are only as strong as their supply chain. What would happen if your deliveries were suddenly interrupted? What if a customer is hurt or killed by a product you sell? What about a product recall where there is an obvious liability?

Bad Press – Social media has changed the playing field. What if a disgruntled employee or customer turned loose on Twitter? What if the media picked up on a story that put you in a bad light? What would be your response?

To the uninitiated, this may seem pretty daunting, but you don’t have to do everything at once. You want to build your crisis plan over time and keep it updated. Plus, we’ve put together all the tools you need, including templates, examples and resources you can use. It’s all online in your handy guide – When Trouble Strike: A Small Business Crisis Planner.

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