Small businesses face challenges and hurdles every single day. At times, small businesses may face crises that can lead them to ruin if they are not handled appropriately.
At Venture X Dallas Park Cities at Campbell Centre, we work with a variety of small businesses across industries, and are uniquely positioned to understand the struggles that come along with operating a small business. In this article, learn about the basic steps of crisis management for small businesses, and some steps to implement into your crisis management plan.
What Is Crisis Management for Small Businesses?
In business, crisis management is the process that a business or organization uses to deal with unexpected and disruptive events that threaten to harm the business itself, the business’ stakeholders, or both. In other words, crisis management is what a business does to minimize the harmful effects of a negative event. Such events can include recessions, supply chain interruptions, natural disasters, technological crisis, malevolent attacks, organizational crises, and more.
Crisis management is especially important for small businesses, who are more likely to be harmed by small changes in the economy than large corporations. During the pandemic, for example, millions of small businesses across the globe have been forced to shut their doors.
What Are the Three Stages of Crisis Management?
There are many theoretical foundations for crisis management. The most fundamental model, from which most subsequent models are derived, has three stages (1). The sub-stages will depend on a variety of individual factors, such as the size of the business, the business’ niche, the type and impact of the crisis, as well as media coverage of the event.
The pre-crisis stage. The first stage of crisis management involves proactive crisis prevention steps, such as issues management and planning. This stage also includes signal detection, which means looking out for signs that a crisis may be oncoming.
The crisis stage. Everything that happens from the onset of the crisis is considered part of the crisis stage. This includes crisis recognition, information distribution, reputation management, and message development.
The post-crisis stage. Once a disaster is over, there is still work to be done. This includes assuring stakeholders and the public that the crisis is over, as well as learning from the crisis and refining your crisis management plans and strategies to better cope in the future.
8 Ideas to Add to Your Business’ Crisis Management Plan
Small businesses are most likely to be threatened by economic crises. In 2021, the unpredictability of the economy due to COVID-19 has made it essential for small businesses to be prepared for another economic downturn. In the same way that families living in a hurricane zone should be prepared with evacuation kits, small businesses must have an actionable plan in place to help them stay afloat should they be affected by another recession.
By preparing steps to take during a crisis, you are already taking part in crisis management by being proactive.
Get a Small Business Administration (SBA) loan. The SBA’s Disaster Assistance program offers low interest loans to small businesses. Because the SBA issues these loans directly, processing time is lower, making them ideal for an emergency.
Look into government funding. Your local city government as well as state and federal government programs may offer funding for struggling businesses during a crisis. It is important to make sure that you know all of your options as far as gathering emergency funding.
Talk to your accountant. Your accountant can provide guidance and advice on the financial side of crisis management.
Educate your team members. One of the most important things you can do in regards to preparing for a crisis is to ensure that your team is educated on all aspects of your crisis management strategy. Keep open lines of communication and inform employees on all of the benefits available to them from the government and other entities during a crisis.
Use your downtime wisely. Finally, have a plan for using any downtime you might have as a result of an economic crisis to get ahead so that your business can come stronger once business picks back up again.
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