Be Prepared: How to build an Effective Crisis Management Plan
Every entrepreneur should understand that even the best of business plans can go off course during an unexpected event. Therefore a business crisis plan is a must. We usually tend to procrastinate while preparing a crisis management plan, but unfortunately, disaster can strike at any stage, and having no back up at that point of time can be risky for the business. Here are some tips to keep in mind while preparing for a business crisis.
1. Build a Crisis Management Team
- It is important to have the leadership team involved in the crisis management plan
- Involve people from different disciplines, so that all views and points can be accommodated in the final business crisis plan
2. Assess the Risks
- Identify potential risks that can disrupt your business and work with all stakeholders to assess the risks
- Devise a contingency plan for short-term as well as long-term. Once the potential risks are known, make a crisis management plan for a period of 3 months, 6 months and then one year. You never know how long the crisis can last
- For e.g. no one anticipated the Corona virus outbreak and the lockdown that will follow. Hence businesses need to plan for the entire year in this case, to make up for the losses incurred by them and by the predicted slowdown
- Carry out a Business Impact Analysis to evaluate which side of the business will be impacted the most. Will it be customer satisfaction, lowering of sales, payment defaults from vendors or damage in reputation in the market?
- Once you know the extent and areas of impact, damage control measures can be listed and put into action during a crunch situation
3. Determine your Contingencies
- Now that we have assessed the risks and the functions that can get impacted, the next step is to jot down how can the crisis be solved and what resources can be used efficiently to do so
- Keep an emergency line of credit handy. You never know how long the crisis lasts so knowing from where you can get funds is always a plus
- Include your employees in crisis communication management. Your marketing team, customer care teams and business heads need to know how they are going to communicate during a problem
- A business crisis plan requires you to train your employees to tackle such situations and also be ready to take on additional functions to ease the pressure of on some teams. Also keep updating them with new skills, you never which one comes in handy during a crisis
4. Act Quickly
- Though we advise you to act quickly during a crisis, but that doesn’t mean you take hasty decisions. During a crisis you need to be even more careful about how you battle the situation
- For e.g. In the early 2000s, Cadbury was in the eye of the story when worms were found in their Dairy Milk Bars. In less than 2 weeks a PR campaign was launched for the trade followed by a nationwide ad campaign with Amitabh Bachchan on their new and improved poly-flow packaging.
- Key learning here is that, Cadbury was quick in their damage control, they did bear a heavy cost of the damage but soon customer confidence was back and they started achieving their sales numbers
- A crisis management plan needs to have steps that can help act faster
5. Keep your Business Crisis Plan updated
- Review your crisis management plan on a regular basis for possible updates or market changes
- We keep talking about the business environment being highly dynamic; there are changes in the market, technology up-gradation and sometimes there might be a case that employees who were a part of this plan might have left the organization. Hence, revisiting the plan will be beneficial for your business
One thing that Covid-19 has definitely taught us is the extent of impact a crisis can have on your business especially when there is no plan in place. If companies who are on the verge of a shutdown had a cohesive crisis management plan, maybe they could sail through these tough times. As they say, ’Better late than never’- there is no harm in having a general preparedness in place for your company to be financially sound in the long run.