What we’re talking about

One inarguable fact of running a business: there are countless things that could – and probably at some point will – go wrong. A delivery might go missing, you could inadvertently wade into controversial territory with a social media post, or a global pandemic could hit and reduce your revenues to zero overnight.

While you can’t avoid the crisis, you might be able to avoid some of the fallout by thinking ahead and putting plans in place for things that could go wrong, however unlikely they might seem. That’s what crisis management is all about: it’s the process of preparing to deal with a disruptive – and usually unexpected – situation or emergency. It involves work across all the functions of the business, from financial modelling to PR. How you respond publicly to an unplanned event can be critical when your community closely follows how you handle things.

Why it’s important

A crisis can happen to a business of any size – not just big multinational ones. And if recent events have taught us anything, it’s the disproportionate impact of a crisis on small businesses. 

The thing to remember is that although crises are unpredictable and you can't directly control them, you can manage how you respond to them to lessen their impact. And the key to your response lies in having a well-laid-out plan and a robust strategy ready to go when one hits. Creating plans for hypothetical events might not be top of your priority list, especially when there are plenty of present issues to keep you occupied. But when you take the time to think about everything that could go wrong, you’ll soon realise the value of some prep. By being proactive and using good management, you can even turn a crisis into an opportunity – enriching relationships with your existing customers, and even gaining new ones.

Things to note

Crisis management is possible on a budget. Though you can spend a lot of time, money and effort on crafting a crisis management plan, there are plenty of free or inexpensive tools and templates to take advantage of as a small business.

A bad response to a crisis can have a longer-lasting impact than the event itself. For example, dealing with a crisis badly might sink staff morale and lead to customer loyalty, and consequently sales, taking a hit. That’s why it’s important to take all aspects of your response into account when you’re planning.

The scale of the crisis can affect your response. That’s why it’s useful to have several contingencies for the same crisis at different scales. For example, your plan might include instructions on what to do if your revenue falls moderately, and different instructions if your revenue drops to zero.

Managing a crisis might take up your time. Make sure your crisis plan includes ideas about how to keep the rest of your business running as smoothly as possible while you’re dealing with the unexpected. For example, by reassigning some of your team members to take over certain responsibilities while you manage the crisis itself.

How to create a crisis management plan

(1) Identify the crises your business could face. First, brainstorm all the possible problems that could pop up – and leave nothing off the table. To get you thinking, here are some common risks businesses face: a financial crisis such as a fall in revenue; a personnel crisis like unethical or illegal activities among your employees; an event that impacts your reputation; a technological crisis like a downed server or a cyberattack; or a natural crisis such as a flood or a storm.

(2) Examine the potential impact of each one. After listing all the possible internal and external issues that could come your way, start to explore how they might impact the various parts of your business, including your operations, finances, staff and reputation. Ask yourself what the knock-on effects of any event might be. For example, a supplier going bust might cause delivery delays that drive customers away – which in turn could lead to a temporary drop in sales, and leave you with less money to cover your overheads. Don’t forget to consider how much it’s likely to cost you to deal with each crisis as well. 

(3) Come up with potential solutions. Consider the crises and impacts you’ve listed and decide what actions you need to take to: reduce the likelihood that they’ll happen; resolve them in real-time; or reduce the impact they have on your business. Treating this as a collaborative exercise and gathering your team to get your collective ideas on a whiteboard is a great way to do this. Make sure you go into granular detail about how long it'll take you to resolve the crisis, what tools and resources you'll need, who'll be involved and whether you'll need to address your staff and customers – or even make a public statement. 

(4) Delegate responsibilities. Allocate specific duties to your team members – even if there are only a handful of you – and bring them up to speed with your plan. For example, you may want someone to handle some of your responsibilities, like ordering stock and managing customer orders, while you’re dealing with the crisis itself. Depending on the type of crisis, you'll also need to identify who to get involved externally, such as solicitors, consultants or first responders.

(5) Update your plan regularly. As your business grows and circumstances change, you'll need to revisit your plan and regularly update it. Aim to review your crisis plans at least every six months to make sure they still apply to your current team, business activities and facilities.

(6) Review your response. Finally, if you do experience a crisis, take the time to evaluate how you handled it and incorporate any learnings into the other plans you have in place or develop in the future.

Key takeaways

• Crisis management is all about advance planning for potentially disruptive situations for your business.

• This type of planning is essential for small businesses – which are likely to be disproportionately affected by major crises.

• Unexpected crises can lead to unexpected opportunities if your business survives them.

Learn more

Perspective. The leaders of international crisis and reputation management firm Bernstein Crisis Management have a blog that explores crisis management issues that appear in the news.

Example. Prohibition’s list of PR crises that various recognisable companies experienced in 2020 illustrates the breadth of issues that can affect a business.

Tool. Smartsheet offers a variety of templates for crisis management plans.