When you run a business, the one thing that’s inevitable is a crisis. At some point in time, your business, and you, are going to face a crisis. However, it’s not what the crisis is that matters most, it’s how you handle it. The best time to learn how to manage a crisis is before the crisis actually happens, and we’re here to help you plan! Here are the top tips for creating a crisis management plan for your business:
1. Shift Your Strategies from Strategic to Tactical.
During a crisis, your priorities and focus must shift from strategic to tactical. Keith suggests that when your business is facing a crisis, you adopt the same protocols used in hospital emergency rooms. Emergency rooms tend to have extreme focus and intensity, constant monitoring, constant communication, the ability to adapt to a new crisis that arises, and speed of action. All of these traits are important to have as a business leader during a crisis. Your goal is to prioritize keeping your business alive and getting it stabilized as quickly as possible. What this means for you is cash. Keeping your business alive and running during a crisis requires cash. In our next point, we’re sharing more about how to ensure your cash flow doesn’t stop.
2. Use a 13-Week Cash Flow Forecast.
The main thing you need to ensure your business will survive a crisis is cash and cash flow. When your cash flow is low, your survival depends on how quickly and effectively you can find a solution. To prepare an effective crisis management plan, you’re going to want to make sure you have clarity about your financial status, cash reserves, and anticipated short-term case forecast. We recommend using a Rolling 13-Week Cash Flow Forecast. We have a 13-Week Cash Flow Projection Sheet for users to download that will help guide you through better understanding your finances. You’ll input the cash you have at the beginning of the month, your projected expenses, and what you have at the end of the month. This will allow you to better understand your cash flow and financial status, and it can prepare you for a crisis!
3. Focus on the Problems You Can Solve.
Our next piece of advice for your crisis management plan is to focus on the problems you can solve. There’s no need to get overwhelmed by all of things happening around you and the “what ifs.” The main problem for you to focus on during a time of crisis is how you can save your business. You have to focus on a way to stabilize your business so that you can live to fight another day once the crises have passed!
4. Open and Honest Communication.
When your business is facing a crisis, it’s important not to keep your team members in the dark. Staying silent can end up breaking trust. By communicating openly and honestly with your team, you’re showing them that you’re working on the issue and that you care about them and their jobs. We recommend communicating as often and as detailed as possible. If your communication plan is done effectively, it can solidify culture. However, if it’s done poorly, it will destroy culture. A suggestion for a conversation to have with your team is:
“We have been working nonstop on figuring out how to stabilize our business, get it to breakeven, and make sure we can survive. We have run numerous financial scenarios and made hundreds of different assumptions about what might happen next. Our best guess is that with this amount of revenue ($____ or __ number of sales) and the current amount of expenses, we can be cash flow neutral and breakeven. If things get worse, or we miss our targeted revenue, or this drags on much longer than we expect, then we will have to make different decisions … “
There are just a few tips to follow when you’re creating a crisis management plan for your business. Remember, the crisis will pass — you just have to develop a plan accordingly to ensure your business survives. Learn more about crisis management and how to get started with your plan today!
