Are you prepared for one when it hits?
What is a business crisis? It’s when there is a mishap on your business and can potentially affect the sustainability of your business. It could be that your business is in a bad rep, or an internal scandal has happened, an unwanted conflict, a PR crisis, a sudden passing of the owner, or even a retail mishap that causes health problems, and others.
You would usually hear a PR scandal happening to bigger brands as they involve the media, such as the Malaysian Airlines MH370 case, Toyota’s recall in 2009, and so on. Nonetheless, this does not mean that smaller brands or businesses won’t be affected.
A crisis can happen to anyone, and at any time. They can also come in many forms. Therefore it is better to have an advance plan at hand so that your business would know what to expect and you as a business owner can better handle the situation. Hopefully, this would also minimise the impact of the crisis on the business. In other words, less money being taken out to solve the issue.
Below we will discuss the steps you can take as a business owner to navigate and effectively handle a business crisis.
- Be honest and open
Most of the time, the first step a business owner or CEO would do when a company is being hit by a business crisis is to keep quiet and not comment on the situation. This is the first step in the wrong direction.
This is because your customers are already anxious about the whole situation. Keeping mum would only do the situation worse, and people or the media would come up with various rumours that could eventually hurt your brand image and worsen the situation.
Especially if the crisis involves your customers, they would be angrier the longer your company takes to respond. Besides, not revealing facts concerning the crisis can cause the media to uncover them, expose them widely and then damage the reputation of the company further.
Instead, what you as a business owner can do is, to state the facts publicly and update the media as it happens. This is not to mean that you can state statement and opinions of your company as the media or the public can misinterpret the meaning behind your statement.
A better way to handle any statements from your company is to have a legal team go through all your company’s statements before they are disclosed to the public.
Being as open and transparent as possible can help calm down the angry crowd and stop the spreading of unwanted rumours from the media. You can post your company’s updates on all communication platforms such as on the website, social media, etc.
If the crisis revolves around your company making a mistake, admit it as soon as possible and assume full responsibility. The sooner you apologize and admit your mistake, the sooner the public will forgive you.
- Prep and talk to your team
When your company is involved in a crisis, your employees and staff get dragged in as well. If you as the CEO and business owner decided to keep quiet and not notify your employees regarding the crisis, an internal conflict would very likely happen among your employees and gossips will spread like wildfire.
Some media would get hold of your employees as well if your brand does not respond on the situation, and not being clear with your employees can lead to your employees spreading misleading information that could tarnish the reputation of your brand.
Besides, pointing fingers among your employees will happen when a crisis hits. It is even possible that the biggest blame would be on you as the business owner. Instead of shifting the blame, you can excel in leadership to ensure the maintenance of continuity and unity among your team members.
A crisis also proves to be the most crucial time when your company has to stick together in unity. Take this time to talk to your staff and prep them on how to handle a situation properly. Hence, your staff would know what to do and not simply provide false information when prompted by the media. The workforce will also be able to operate as normally as possible and can reduce rumours that can lead to posting false reports on social media.
If the crisis involves your customers, ensure that your customer service department is fully prepped in handling angry customers and complaints. Train them so that they would know what to do and also keep you in the loop should they receive any feedback from your customers regarding the situation.
- Assign a team to handle the media
When you have the manpower, you can assign a team of spokespersons or a crisis management team to handle and defuse the chaos of the crisis. They would also be the contact person for the media and anything that they say would represent the decision from your brand.
Having a team would be beneficial as it will be more organised at the time of the crisis and they would be the best people to go to regarding the updates on the situation. This team would be responsible for informing all employees, stakeholders, board members, etc. and save the company from having to explain comments from any unofficial company representatives later.
An effective crisis management team is usually made up of both in-house professionals who have inside knowledge of the company and external experts who can see that situation from a journalistic perspective.
Any internal information relating to the crisis can only be given to the crisis management team and/or spokesperson to ensure that the business or brand speaks with a single, consistent voice. A specialist should then be assigned to handle the technical aspect of the crisis.
- Identify and address affected parties
When a crisis hits, a number of parties will be affected and that could be your employees, customers, stakeholders, business partners, etc. The first and foremost thing to do is to address those affected by the crisis and come up with a compensation plan for them.
Your business should already prepare a few statements and press releases ready to go before you’re approached by reporters or your stakeholders. This is so everyone is clear on the action that is taken to deal with the crisis and this also shows that your company is already working on a solution to solve the crisis.
Immediately discuss with your team on how your company is going to solve the problem rather than focusing on finding more problems relating to the crisis.
If your customers are affected by the scandal, you must already have an action in mind to solve the scandal, whether it is a recall, compensation, etc. To rebuild the trust your customers once had with your company, you can offer an immediate full refund or replacement policy to restore the goodwill among customers. An additional bonus to affected customers in the form of a gift card or discount coupons will also help rebuild customer loyalty.
- Monitor the situation
When a crisis happens, sure it may be temporary but if it is not managed properly, then the outcome can be devastating to the business. No one knows for sure how long a crisis can last, which is why it is imperative to monitor all possible feedbacks and the results of your company’s decisions to handle the crisis.
You can assign your staff or your response team to keep an eye on all inbound and outbound communications to address and track all follow-up questions and concerns. This includes social media, the media, and all customer feedbacks, etc. By tracking what people are saying about your brand online and offline, you can be certain whether the steps you are taking to handle the crisis are correct or not.
Companies are at risk of losing 22% of their business with just one negative article on the first page of search results, according to Reputation Management. You can look at Google images, online review sites, social media platforms and even your own website for any negative, user-generated content.
You can also set-up monitoring systems that would quickly uncover negative trends online by utilising programs like Google Alerts, Hootsuite, etc. This is so that you may catch the problem at the root before they fester to become a bigger problem and then, amplified by the media.
- What not to do
- Lash out emotionally
The last thing you would want to do is to lash out your opinion angrily on social media. That would put your business in a bad light and it would be harder to redeem yourself. Negativity breeds negativity and angry customers will only become angrier.
This also shows the immaturity of your business and brand, forecasting an unfavourable shadow and having customers to forever remember the ugly side of your business. Besides, customers are less likely to buy from a business with a bad temperament.
- Have no comment
Having nothing to say to the public and media as well as to not disclose whatever your company is doing to undermine the crisis can be misinterpreted as trying to cover up or avoid the issue.
What you can do is, to be honest that your company does not have all the answers yet but you will give a full explanation on what has happened in a press release.
- Responding too slowly or too quickly
Responding too quickly would have you mistakenly say something that is not meant to be said and responding too slowly would only worsen the situation.
Having to backtrack or contradict previous statements later could further damage your reputation. Delaying your response time won’t do you any favours either.
All in all, people will judge you more on what you did about the situation than what the situation originally was. It is always better to have a prearranged plan beforehand so that if anything happens, all your stakeholders are briefed and your company would know what to do.
A crisis is a valuable learning opportunity that when handled properly, it can increase the image of your business and increase revenue.
Nonetheless, whatever the crisis may be, good or bad, it is always best to respond and deal with it immediately.
As for any crisis pertaining to the financial aspect of the business, trust that you can rely on FS Bolt for a quick injection of funds of up to SGD 50k. We understand that time is of value, hence you will only need 2 minutes of application time and you would know if your funds are approved within 2 hours. Besides, you would be able to get access to the funds within 24 hours. Download it here.
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