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There are many crises that a company can face during its lifetime, and they happen for many different reasons. Whether it’s a financial crisis, an economic crisis, an environmental crisis or any other type of crisis, it’s important for business leaders to have a plan in place to manage the situation quickly.
If well thought-out, a business leader’s first step when faced with a company crisis can set the course for an effective solution. Here, eight members of Young Entrepreneur Council discuss the first steps a business leader should take when faced with a company crisis and why they should take them.
Young Entrepreneur Council members share insights on crisis management.
Photos courtesy of the individual members.
1. Take Time To Cool Off
A leader should never react with anger or let themselves be swayed by high emotions. If you’re upset, it’s important to first take a step back, collect all the information and come back with a cool head so that you can tackle the issue effectively. Being a hothead will only deteriorate team morale further during a time of crisis. Taking a day to think over your response and be rational when you take action will benefit your team and your company. – Brian David Crane, Spread Great Ideas
2. Conduct An In-Depth Situation Analysis
A leader should first calm down, take a big breath and conduct an in-depth analysis of the situation. The last thing you want is to fight with whatever you can without a strategy. For example, there was a time when our revenue was flat and expenses were increasing, so members began to worry about the future and give their commitment to the firm a second thought. In this situation, talking to your team just to cool them down or cut costs at the expense of future business growth would not work. Instead, I first distanced myself and rested until I stopped being emotionally stressed. Then, I was able to sit down and perform an objective calculation that showed we could get out of the ordeal by taking certain actions, which was persuasive to the team. – Lianxin He, GrandLine Technologies
3. Address The Crisis With The Team Openly And Publicly
Uncertainty can cause stress in the company and ultimately have a negative impact on employee performance. Strong leaders lead, and if employees don’t hear that leadership is aware of the crisis and has a plan, uncertainty and stress will permeate. The best course of action is to call an all-hands-on-deck meeting. Assert that leadership is aware of the crisis. Explain with confidence how the crisis will be addressed and what is needed from employees. Give employees the opportunity to ask questions. Not only will this help build confidence, but the open and honest approach by leadership also builds employee trust. When the company is working together, any crisis can be solved with trust and confidence! – Bill Mulholland, ARC Relocation
4. Think About The Situation From All Angles
How will this affect the staff? How will this affect the vendors? What about your investors? What about your customers? Seeing the value that each piece of the puzzle brings can help you in determining what is most important to save and what is okay to reduce. You may make a plan to keep 80% of the company happy while figuring out a way to eliminate 20% of the company that isn’t adding as much value. Cutting 20% of the company that is no longer valuable may be just what you need to come out of a crisis. – Mary Harcourt, CosmoGlo
5. Acknowledge What Happened And Take Responsibility
Crisis management is one of those things that falls into the “simple, not easy” category. It’s mostly about three things: transparency, integrity and calm. It’s critical to be transparent with those affected, be they employees who experienced layoffs or customers you have failed in some way. Acknowledge what happened. Take responsibility. Focus the team on doing the right thing. Be calm in the face of the storm. If you do all of this, people will trust you more, not less. Some of the greatest failures I’ve experienced ultimately made our brand stronger, externally and internally. We were open and honest about mistakes made, we made them right and explained what we were doing to make sure this never happens again. Do this, and a crisis won’t break you—it will make you stronger. – Alex Furman, Invitae
6. Consider The Right Approach To Take
You should assess whether the solution is to salvage the situation or reallocate resources elsewhere. When a crisis occurs, many business owners react by trying to mitigate damage and may over-invest in trying to recover from that particular setback. However, in some cases, it’s better to wind down that part of the business and reallocate resources toward faster-growing areas of your company. That way, you’re committed to growing your business overall instead of focusing too narrowly on maintaining revenue in a specific category. – Firas Kittaneh, Amerisleep Mattress
7. Gather All The Facts
Gathering information before you react, assign tasks, place blame or anything else is so important. Find out who is involved. Find out where the breakdown is or was. Get multiple “takes” on the situation, if possible. From there, take your time to assess the situation and put together a plan of action. Your team will react to your reaction. If you use facts to inform decisions and stay calm, your team will follow suit and the situation will be much easier to resolve. – Ryann Dowdy, Uncensored Consulting, LLC
8. Let Your Customers Know About The Problem
The hardest part of dealing with a company crisis is letting your customers know about the problem. I’ll be the first to tell you that letting people know sooner is always better. You don’t want to wait until the problem escalates into a full-on situation before you make your customers aware of the issue. I recommend reaching out to existing customers on your website and via email and social media so you can stay transparent through your company crisis. – John Brackett, Smash Balloon LLC