2018-02-27 14:03:06 Running a Business English Create a small business strategy that addresses crisis situations immediately and effects a strong turnaround. Learn how to recognize the... https://quickbooks.intuit.com/ca/resources/ca_qrc/uploads/2018/02/Small_Business_Owner_calls_Her-Bank_To_Discuss_Credit_Restrictions.jpg https://quickbooks.intuit.com/ca/resources/business/small-business-turn-around-strategy/ Develop a Turnaround Strategy to Save Your Small Business From Crisis

Develop a Turnaround Strategy to Save Your Small Business From Crisis

4 min read

Some crises are simply unavoidable. Customer complaints can go viral, employees can harass each other, faulty products can lead to lawsuits, and thousands of other crises can affect your business as well. To deal with these situations head on, you need crisis management procedures in place, and to prepare, you need a firm grasp on the things that could go wrong and how to address them.

Recognize the Signs of a Crisis

The first step in a crisis turnaround is recognizing the crisis, but the signs vary depending on the type of issue. If you’re losing lots of employees or having frequent disciplinary issues, you may be facing a management crisis. If your clients are paying their invoices too slowly, a working capital crisis may be just around the bend. If sales are dropping, there may be a crisis related to pricing, quality, or satisfaction. In addition, declining stock prices, diminishing liquidity, and debt rating downgrades can signal bigger issues to come.

So you can recognize the signs, consider making a list of potential crises. That should include everything from cyber attacks to losing customers. Then, write down the signs that each of these issues is imminent and start to develop your crises management plans. Getting out in front of these issues helps with damage control.

Have Crisis Management Plans in Place

When you establish guidelines to deal with potential problems, you have somewhere to go when a crisis occurs. For instance, if a bad review causes your social media to blow up, you need a worker ready to respond. You don’t want to scrabble around in the midst of the crisis looking for a public relations person to handle the situation and trying to create a tone to respond to the complaint. All of that needs to be ready to go in advance. Similarly, if there is a cyber attack, you also need a plan in place. That might include notifying the tech team, taking all the computers offline, and contacting your clients.

Have Alternate Funding Ready for Stressful Situations

Dealing with crises can be expensive, and sometimes, the crisis is that you’re short of cash. In both cases, having access to funding can help you weather the storm. Sock back cash during profitable times to keep afloat during lean times, and work with trusted lenders so you have alternate funding options ready if you need them.

At a minimum, you need to ensure you always have enough cash on hand to cover payroll, or you could end up with huge morale problems or high turnover rates. Unpaid or underpaid workers can damage your business by word of mouth after they leave, exacerbating the crisis and putting you in even more of a bind.

Take Control of the Narrative

The way your employees, investors, and customers see the crisis has a huge impact on your brand image. To minimize damage, you need to control the narrative and keep it positive. You can do this by readily discussing the problem with key players in an honest yet optimistic fashion.

For instance, if your company fails to meet performance expectations due to equipment upgrades or promotional expenses, come clean with the reasons and show how the things you spent capital on can boost future company profits. By shifting a report of lower profits to a more agreeable "growing pains" narrative, you invite employees, investors, and customers alike to share in big wins down the road. Make it a point to highlight small, successful changes within day-to-day operations to show your business remains on course even during the tough times.

To take another example, imagine there’s a cyber breach and you lose customer data. If you try to keep it undercover, you risk the media finding out and adding its spin to the story. In contrast, if you break the news to your clients, you get to control the story. You can let them know that it was a small isolated issue, and you can offer them identity theft protection or other reassurances that their data is safe.

Seek Professional Help for Legal or Tax Issues

When your company faces potential legal problems due to product failure, customer injury, or tax issues, you may need professional help. Big problems require big solutions, so having a competent lawyer or accountant who understands the ins and outs of your business can mean the difference between failure and creating a turnaround. As with any other crisis, the best offense is a good defense, so it’s a good idea to retain counsel early on in and get an accountant on speed dial. Keeping qualified professionals on retainer can be much cheaper in the long run than trying to hunt someone down to help when things go wrong.

These professionals can help you form a cohesive plan that addresses the issues your company might face. They also can help you deal with the public, the courts, and government agencies in a streamlined fashion that keeps your business up and running through the crisis and into the resolution phase.

Being prepared for a crisis can help you turn around the situation even when the outlook seems dark. Have plans in place for numerous eventualities and ensure your business has funding in place to manage a range of crises.

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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