Nobody can predict if (or when) a crisis will hit, but businesses must be prepared for them all the same.

Having multiple crisis management plans can ensure your business’s survival and even growth during difficult times, allowing you to adapt to the situation. 

But is it really necessary to prepare “multiple crisis plans”?

We think so because no two crises are alike.

Hubspot has shortlisted different types of crises that businesses may encounter, such as:

• Financial Crisis
• Personnel Crisis
• Organisational Crisis
• Technological Crisis
• Natural Crisis
• Confrontation Crisis
• Workplace Violence Crisis 
• Crisis of Malevolence

But even these crises can have subcategories as they become more nuanced and specific, depending on how the crisis impacts external factors such as your area of business, industry and target audience. 

For example, if an accommodation provider was recently impacted by bushfires, even if their property was undamaged, they might see a decrease in tourists or guests in the coming months. Having a crisis management plan that specifically addresses this type of natural disaster is crucial in helping this business recover.

A crisis can put an organisation’s stability and continuity at risk, which is why businesses must be prepared and equipped to handle these situations should they arise.

What COVID-19 taught businesses about dealing with a global crisis

While it is behind us now, COVID-19 remains a relevant example of how small businesses can deal with future global crises. An article by Harvard Business Review assessed how the Covid-19 crisis exposed the success (and failure) of varying small and medium-sized businesses (SMBs), allowing us to identify the factors that differentiate them. Well-capitalised enterprises were able to weather the storm better than cash-poor community businesses. 

Meanwhile, hospitality venues were forced to shut down for public health and safety reasons. Digitally-enabled retailers strategically shifted their delivery and customer services online, pivoting to a completely new business model altogether.

These are the key differentiations between the success and failure of SMBs during the COVID-19 crisis:

• Deeper digital capabilities – Incorporating digitisation with your people and processes can help your business adapt to technological advancements and disruptions. It also allows you to leverage digital innovations to boost your business.
• Skills transitions and recruiting – Focussing on training and development can give your staff the skillset and flexibility needed to scale up or pivot your organisation.
• Agility and innovation – You can make your business agile and resilient by plotting your current course of action to success with future crises in mind. This will allow you to scale your business up and down, depending on what is feasible.

No one could have anticipated the unprecedented impact of COVID-19 around the world, and it has become a valuable lesson in the importance of preparing for a crisis, especially for a small business.

5 ways small businesses should deal with a crisis

These are five concrete steps that can help small and medium-sized businesses prepare effectively for different types of crises. 

1. Develop a crisis management strategy ahead of time

Crisis management involves taking a series of steps by an organisation to deal with a catastrophic event. It is possible to have multiple crisis management plans in place to ensure that your business is prepared for different scenarios.

There are key inclusions common in every crisis management plan:

• Risk analysis: This involves a study of potential crises that your business may face, both internal and external threats.
• Activation protocol: This defines the events that will trigger the activation of your crisis management plan.
• Chain of command: This identifies the relevant decision-makers during a crisis.
• Response action plan: This assigns roles and responsibilities to different individuals as part of the crisis response team.
• Internal communication plan: This establishes the communication system and channels to be used by you and your staff during a crisis. 
• External communication plan: This establishes the communication system and channels with the public as well as external stakeholders 
• Required resources: This shortlists the necessary resources during a crisis, which may vary depending on the potential scenario. A natural crisis may require food, water and blankets. An organisational or confrontation crisis may need public relations specialists and legal teams.
• Crisis management training: This involves programs and training sessions to properly equip and prepare your staff for different crises.

2. Create a crisis management team

Building a crisis management team is integral for your business to successfully survive (and thrive in) a disaster. This team is responsible for executing and coordinating the company response in the event of a crisis.

The crisis management team structure includes the command team, which oversees the crisis response, and four subteams (or individuals, in the case of small businesses):

• Command: Your command manager handles the overall crisis response, identifying the objectives and directives of each subteam to ensure that the business successfully overcomes the current crisis.
• Operations: Your operations manager handles the tactical operations of the crisis response. They perform the initial damage assessment on the business and identify solutions to restore the business operations to normal.
• Planning and Intelligence: Your researcher gathers, analyses and shares information about the crisis at hand and recommends action plans that the business can implement.
• Logistics: Your logistics manager handles and distributes the necessary resources. This can include food, shelter, transportation, medical care and/or counselling for the crisis team and the organisation.
• Finance: Your finance manager monitors and documents the costs and expenditures of the crisis response and provides administrative support.

The principles of developing an effective crisis management team are similar to developing high-performing, self-sufficient teams in the business. It’s crucial to find trustworthy, competent, and highly motivated people for your crisis management team.

3. Conduct crisis simulations

Crisis management training and exercises can help you and your staff gain confidence in dealing with unforeseen disasters.

This means that your crisis simulations should be multidimensional and developed with a maturity-based approach, as this provides a realistic element and allows you to adapt the simulation, depending on your objectives, available resources and scenario design. 

A well-prepared simulation with clear objectives can help you identify any flaws or areas of improvement in your crisis management plan.

4. Build open and transparent communication lines

A crisis can trigger feelings of uncertainty and anxiety, which is why you need to be prepared with a crisis management plan you can quickly put in place. This includes a strong communication system that can help you connect with senior managers, employees and stakeholders.

Crisis communications include sharing updates, addressing concerns, coordinating response efforts and demonstrating empathy with both internal and external parties relevant to your business.

The best practices for effective crisis communications you need to consider include:

• Transparency
• Prioritisation of safety
• Consistency in messaging
• Accessibility
• Regular updates
• Internal communications
• Collaborative approach
• Empathy and compassion
• Active listening

5. Prioritise your cash flow

To ensure business continuity during a crisis, it’s important to be careful of the cash flow and make sure that the organisation is still generating cash instead of losing it. Having a financial manager in your crisis team is essential in monitoring your business cash flow.

Identifying ways you can raise capital for your business can help you plot your post-crisis action plan, allowing you to hit the ground running as you recover from a crisis. This can also help you recover any revenue or funds lost during the crisis management period.

Dealing with a global (or even local) crisis can be challenging for any small business. It’s important to have someone in your corner who can help you thrive in these difficult situations and make sure that you’re still on track to achieving your goals. Contact us and our business coaches will help you crisis-proof your enterprise.