As all of us know, having lived through 2020, crises happen.
Even when a pandemic isn’t shutting down the economy for months causing businesses in many industries to lay off or furlough workers, unforeseen disasters and mayhem can and do occur. We’re talking about natural disasters like floods, hurricanes or tornadoes; serious injury, ailments or divorce befalling the owner of a small business and changing their fortunes in a negative way; employee theft; cyber crime; violence in the workplace; even the sudden loss of a major customer or a recession hitting our shores.
Any one of these can decimate a small business’s bottom line.
Nobody can predict when a crisis is going to happen, but being prepared can lessen its negative impact. Not only will it give you peace of mind, but it will create a sense of confidence and security for your employees as well.
In this post, we’ll cover ways to prepare your business for the worst, and strategies to handle and manage a crisis while it’s happening. Together, these solid tactics can help small businesses weather any storm.
Preparing for a crisis
If you prepare and plan for a crisis before it happens, you’re doing all you can to soften the blow it can be to your business. It might mean the difference between keeping your business afloat and losing it altogether.
Get a line of credit
If you do nothing else, do this. You might not need those funds now, but that’s exactly the point. When your business is humming along nicely is the time to explore securing a line of credit. That extra working capital will sit there in reserve as your lifeboat if and when a crisis hits. Those funds can get your business through the crisis and beyond.
Make a small business crisis management plan
Don’t know where to start? Don’t worry. You don’t have to reinvent the wheel here. Take a page (literally) from FEMA, the gold standard of responding to crises and disasters. FEMA has a free, downloadable Emergency Response Plan for businesses, to help them put the necessary steps in place to get them through a crisis. You can customize it to meet your specific needs, but it covers every possibility.
- Company goals and objectives for the plan.
- Names and numbers of emergency services and contractors like the fire department, police, hospital, state environmental authority, electricians, plumbers and more.
- Creating a dedicated emergency response team among your staff.
- Deciding who does what in a crisis, like who makes sure payroll gets met if your business is hit by a tornado, or who will be in charge of evacuating employees.
- Evacuation plan, including instructions for sheltering in place. You should have water, blankets and other emergency supplies on hand.
- Plans for lockdown, fire, flood, severe weather.
- Medical emergency plan, including who calls 9-1-1 and which staff, if any, are trained in CPR.
- Other threat-specific plans that cover floods, biological hazards, technology events; accidental events like hazardous spills, and transportation accidents; and intentional events like theft, bomb threats, suspicious packages and terrorism.
Sit down with your team
You’ll have talked with your emergency response team members, but it’s crucial to talk to everyone on staff, too. Let them know about your efforts to prepare for a crisis, show them the plan you’ve put together, and talk about crisis preparedness. Not only will this reduce panic if a crisis hits, but it will create a feeling of security and confidence. You may want to talk with your major clients and other company stakeholders, too, to let them know your plans.
Make sure you have 401(k)s or other investment plans in place
If the worst happens and your business is decimated, having a solid retirement investment plan for yourself and employees will protect them in the long run. The business may have taken a hit, but their futures are covered.
Managing a crisis
You’ll have prepared for a crisis, so you won’t be blindsided if and when it occurs. But nonetheless, it’s jarring and emotional to realize the ship is taking on water and may sink. Here’s what to do in the moment:
Realize and admit you have a problem
It’s very easy to do when a tornado blew part of your roof away or your office flooded. Intentional employee theft, cyber crime or blatant accounting errors are more difficult to get your mind around. It’s critical to see the situation for what it is in order to act on it quickly.
Activate your plan
This is not a drill. It’s the time for your crisis management team to spring into action. Ideally, you will have trained your people (and yourself) on the necessary steps to take so when the time comes, they know what to do. Most critical: the health and safety of your employees. After that, it’s about securing your financials.
Take corrective action
Depending on what has befallen your business, this might mean cutting expenses, putting new projects on hold, or at worst, laying off staff. Here is where your line of credit can come into play to get you through the crisis and beyond.
At Equity Trust, we’re your small business partner in good and bad times.